Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Sunderland Corporation Bill,

As amended, considered; to be read the Third time.

Boston Corporation Bill [Lords],

Bournemouth Gas and Water Bill [Lords],

Read a Second time, and committed.

Hertfordshire County Council Bill [Lords],

To be read a Second time upon Wednesday, at half-past Seven of the clock.

Hoylake Urban District Council Bill [Lords],

To be read a Second time upon Wednesday.

Milford Docks Bill [Lords],

To be read a Second time To-morrow.

Swansea Tramways Bill [Lords],

Read a Second time, and committed.

London Building Act (Amendment) Bill [Lords] (by Order),

Second Reading deferred till Wednesday, at half-past Seven of the clock.

Lanarkshire County Council Order Confirmation Bill,

Read the Third time, and passed.

PERSONS IN RECEIPT OF POOR RELIEF IN ENGLAND AND WALES.

Return ordered:
showing the number of persons in receipt of Poor Relief in England and Wales on the night of the 1st day of January, 1935 (in continuation of Parliamentary Paper, No. 95, of Session 1933–34)".—[Sir Kingsley Wood.]

STANDING ORDERS (PRIVATE BUSINESS) (LONDON PASSENGER TRANSPORT BOARD (FINANCE) BILL).

Motion made, and Question proposed,
That in the case of any Bill promoted by the London Passenger Transport Board during the present Session in pursuance of or for purposes connected with an agreement
made on the 20th day of June, 1935, between the Treasury, the London Passenger Transport Board, the Great Western Railway Company, and the London and North Eastern Railway Company, a copy of the terms whereof was laid before this House on the 18th day of June, 1935, the following provisions shall, notwithstanding anything in the Standing Orders relating to Private Business, have effect, that is to say:—

(1) The Petition for the Bill, with a printed copy of the Bill annexed, shall be deposited in the Committee and Private Bill Office on or before the 27th day of June, 1935;
(2) Notice of the Bill shall be published not later than the 2nd day of July, 1935—

(a) once in each of two successive weeks with an interval between such publications of not less than six clear days in some newspaper or newspapers published in the county of London; and
(b) once in the London Gazette;
(3) All copies of the Bill required by the Standing Orders to be deposited shall be deposited on or before the day on which the Petition for the Bill is deposited in the Committee and Private Bill Office, and all copies of the Bill required to be available for inspection or purchase shall be so available on and after the said day;
(4) The Bill shall, as soon as may be after the deposit of the Petition, be presented for First Reading, and shall, after the First Reading, be referred to the Examiners of Petitions for Private Bills, who shall give two clear days' notice in the Committee and Private Bill Office of the day appointed for the examination thereof, and the Bill shall not be read a Second time until the Examiners have reported whether the preceding requirements of this Order have been complied with;
(5) If any petition shall have been presented against the Bill within the time appointed by Standing Order 129, and not withdrawn, the Committee to which the Bill is referred shall have leave to consider it forthwith, provided that one clear day's notice of the day and hour appointed for the first meeting of the Committee shall have been given, and that a filled-up Bill shall have been deposited in the Committee and Private Bill Office and laid before the Chairman of Ways and Means and the Counsel to Mr. Speaker one clear day before the meeting of the Committee, and the Committee shall hear and determine any question of locus standi of petitioners;
(6) The Bill, if reported by the Committee with Amendments, shall be ordered to lie upon the Table and may be taken into consideration on the day on which the House shall next sit provided amended prints shall have been previously deposited, and the Third Reading of such Bill may be taken immediately after the consideration of the Bill, as amended;
(7) The Bill, if reported by the Committee without Amendment, shall be
781
ordered to be read the Third time on the day on which the House shall next sit;
(8) All Amendments made by the House of Lords to the Bill shall be taken into consideration forthwith and, if opposed, shall be considered at such time as the Chairman of Ways and Means shall determine.
Where it is intended to propose any Amendment thereto a copy of such Amendment shall be deposited in the Committee and Private Bill Office, and notice given on the day on which the Bill shall have been returned from the House of Lords."—[The Prime Minister.]

Mr. LANSBURY: I said on Friday that I would take the opportunity of speaking on this matter, but I understand that, if I did so now, it would be impossible for the Motion to go through to-day. Therefore, I will reserve what I have to say to a more convenient opportunity.

Mr. SPEAKER: If the right hon. Gentleman has any question to raise, it would have to come on at half-past seven.

Question put, and agreed to.

Oral Answers to Questions — CHINA.

Mr. CHORLTON: 3.
asked the Secretary of State for Foreign Affairs whether any other Powers and, if so, which, are sending financial experts to China to advise their respective Governments on the situation there?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Samuel Hoare): As soon as the Chinese Government had been informed of the appointment of Sir Frederick Leith-Ross, His Majesty's Government communicated with the United States, French, Japanese and Italian Governments and expressed their hope that these Governments would take similar action. I have not as yet received any intimation of their intentions in this respect.

Mr. CHORLTON: 4.
asked the Secretary of State for Foreign Affairs for what purpose Sir Frederick Leith-Ross is being sent to China; and whether he can give any further details than those contained in the announcement issued by his Department?

Sir S. HOARE: I would refer my hon. Friend to the first paragraph of the statement which I made on the 17th June in reply to a question put by my hon.
Friend the Member for Lincoln (Mr. Liddall) to which I have nothing to add.

Mr. CHORLTON: When will it be possible to obtain any further information relevant to this visit? I am aware of what has been said, and I am trying to get to know something more about it.

Sir S. HOARE: I have given all the relevant information. If the hon. Member will tell me what further information he requires, I will see whether I can get it for him.

Oral Answers to Questions — NAVAL ARMAMENTS (ANGLO-GERMAN AGREEMENT).

Mr. COCKS: 5.
asked the Secretary of State for Foreign Affairs whether, seeing that a German fleet built up to the strength of 35 per cent. of the British Navy will dominate the Baltic, he has taken steps to ascertain the views of the Governments of Soviet Russia, Sweden, Latvia, Estonia, Lithuania, Poland, and other Baltic states, on the effect of the Anglo-German naval agreement?

Sir S. HOARE: The answer is in the negative. The Soviet Government were, however, informed officially of the terms of the agreement reached between His Majesty's Government and the German Government.

Mr. COCKS: Seeing that by this agreement these small States will be placed at the mercy of Germany, does the British Government intend to propose an Eastern pact to guarantee the frontiers of those States?

Sir S. HOARE: No, Sir. I do not at all admit the assumption of the hon. Member that these small States will be left at the mercy of Germany. I regard the agreement as good, not only for ourselves and Germany, but for all the naval Powers.

Mr. THORNE: Does not the right hon. Gentleman know that this agreement is a complete violation of the Versailles Treaty and a violation of the Stresa Agreement? When the Minister for League of Nations Affairs returns from Paris and Rome, will a statement be made in this House?

Sir S. HOARE: I think very probably a statement will be made, but I can admit neither of the assumptions in the hon. Member's supplementary question.

Sir PERCY HARRIS: Will particulars of this agreement be lodged at Geneva with the League of Nations, officially, and be brought to the attention of the Disarmament Conference?

Sir S. HOARE: I think the hon. Baronet had better put the question on the Order Paper.

Mr. VYVYAN ADAMS: 50.
asked the Prime Minister whether and, if so, when facilities will be granted for a Debate upon the Anglo-German naval negotiations and matters germane thereto?

The PRIME MINISTER (Mr. Baldwin): I would refer my hon. Friend to the answers given to supplementary questions arising out of the reply to a question put by the hon. Member for Aberdare (Mr. G. Hall) on Friday last.

Mr. CHURCHILL: Before we have a debate upon this matter, will the Prime Minister endeavour to secure the publication of the respective draft programmes of the two countries, without which consideration of the matter is very ineffective?

The PRIME MINISTER: I should doubt the utility of any general discussion at present.

Oral Answers to Questions — GERMANY (BRITISH EX-SERVICE MEN'S DELEGATION).

Mr. COCKS: 6.
asked the Secretary of State for Foreign Affairs whether, in view of the proposal to send a delegation of ex-service men to Germany for the purpose of furthering the interests of peace, he will use his good offices with the German Government with a view to obtaining facilities for the delegation to meet the leaders of the German peace organizations?

Sir S. HOARE: I have nothing to add to the reply which I gave to the hon. Member for Ebbw Vale (Mr. A. Bevan) on the 19th June.

Mr. COCKS: Is the right hon. Gentleman not aware that unless such action is taken the only people these delegates will meet will be men like General Goering and other Nazi protagonists? Is that the policy which His Majesty's Government desire?

Sir S. HOARE: No, Sir. This is a matter that is in the hands of the British Legion. I have no reason to think that they are not making satisfactory arrangements for themselves. They have made no request to me, and I have no reason to think that they are not making the arrangement which they themselves desire.

Mr. COCKS: Is the right hon. Gentleman aware that the leaders of the German peace organisations are all in concentration camps?

Oral Answers to Questions — ANGLO-FRENCH DECLARATION.

Mr. COCKS: 7.
asked the Secretary of State for Foreign Affairs whether the Anglo-French declaration of 3rd February still represents the policy of His Majesty's Government?

Sir S. HOARE: Yes, Sir.

Mr. COCKS: Is it not a fact that that agreement said that there must be no unilateral decision on the part of Germany and that there must be a munilateral general agreement based on Part V of the Treaty of Versailles, and also on condition that Germany should sign an Eastern pact and return to the League? Is not the naval agreement a breach of that?

Sir S. HOARE: No, Sir. The practical methods of giving effect to this policy must needs be, and indeed are, at the present time, the subject of discussion between the two Governments.

Mr. THORNE: Is it not a fact that in consequence of the violation of the agreement arrived at on the 3rd February the Minister for League of Nations Affairs is at present paying visits to Paris and Rome?

Sir S. HOARE: No, Sir. That is not the case. I have already informed the hon. Member who asked the original question that this agreement is not a violation of any agreement that we have made.

Oral Answers to Questions — PROPOSED WESTERN AIR PACT.

Mr. V. ADAMS: 8.
asked the Secretary of State for Foreign Affairs what progress has been made towards general
limitation of aerial armaments and towards a Western air-pact of mutual guarantee?

Sir S. HOARE: I have nothing to add to the answer which I gave to the question put by private notice by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) on 17th June.

Oral Answers to Questions — ITALY AND ABYSSINIA.

Captain WATERHOUSE: 9.
asked the Secretary of State for Foreign Affairs whether he has any statement to make with regard to the incident arising from a visit of the secretary to the Italian legation to a picture palace in Addis Ababa?

Sir S. HOARE: I presume my hon. and gallant Friend refers to an incident which was reported a day or two ago in the Press. No official confirmation of this report has yet reached me.

Captain WATERHOUSE: Does the right hon. Gentleman not think that he could use his influences to restrain the exaggerated reports, which must have a bad effect on public opinion both here and in Addis Ababa?

Sir S. HOARE: It is difficult for the Government to exercise any influence over the Press, even if they so desired. Perhaps the hon. and gallant Member will use his influence.

Oral Answers to Questions — TRADE AND COMMERCE.

RUSSO-GERMAN AGREEMENT.

Mr. DICKIE: 10.
asked the Secretary to the Overseas Trade Department whether he can give particulars of the long-term loan which it was recently reported had been granted by the German Government to the Union of Soviet Socialist Republics?

Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): I assume that my hon. Friend has in mind the long-term credit which is provided for in the Russo-German Trade Agreement of the 9th April, 1935. The text of this Agreement has not been published, but from summaries which have appeared in the German Press, I have prepared a memorandum which with my hon. Friend's permission I will circulate in the OFFICIAL REPORT.

Following is the memorandum:

RUSSO-GERMAN TRADE AGREEMENT.

9th April, 1935.

According to summaries which have appeared in the German Press, the Agreement distinguishes between current orders, which are to amount to not less than 60 million marks and will remain subject to the method of financing hitherto in force, and new orders which are to be placed in Germany by the Union of Soviet Socialist Republics within one year up to a value of 200 million marks.

For these additional orders, which are to be placed on condition that terms of delivery and prices are right, the Union of Soviet Socialist Republics will receive a credit of an average duration of five years at 2 per cent. interest over Reichsbank discount rate from a German banking group headed by the Deutsche, Diskonto Gesellschaft & Dresdner Banks. These banks will discount the bills of the German delivery firms and will pay the equivalent to the Soviet Trade Delegation in Berlin which will thus be enabled to pay cash to the suppliers. Bills are guaranteed up to 70 per cent. of their value by the Reich and German suppliers will be liable for 30 per cent. of their value during the whole period of the credit.

The Agreement also provides

(a) for the delivery of goods from the Soviet Union to a value not exceeding 150 million marks—thus effecting a partial balance of trade.
(b) for the liquidation of outstanding Soviet indebtedness to Germany for past purchases. This is said to have amounted to 250 million marks at the end of 1934, of which nearly 200 million marks are due for payment in 1935.

TRADE REPORTS.

Captain P. MACDONALD: 56.
asked the Financial Secretary to the Treasury, what is the present approximate circulation in this country of the reports prepared by His Majesty's consular officers and trade commissioners with regard to the openings for trade in the principal countries of the world; and whether any consideration can be given to a reduction of the present annual subscription for such reports, which amounts to £3, and for substantially increasing their circulation?

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): The circulation in this country of the Department of Overseas Trade Annual Economic Reports varies from about 1,000 to 2,000 copies, according to the country concerned. It is proposed to reduce the annual subscription to the series from £3 to £2 on the 1st January next, and
if my hon. and gallant Friend has any further suggestion to make which would be likely to increase the useful circulation of the reports, it will receive careful consideration.

IRON AND STEEL INDUSTRY.

Mr. CLEARY (for Mr. MAINWARING): 36.
asked the President of the Board of Trade whether he will arrange to lay Papers upon the Table of the House giving full particulars of the recent agreement entered into between steel producers of this country and the International Steel Cartel?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): A statement from the British Iron and Steel Federation giving particulars of this agreement was published in the Press on 12th June. As the further negotiations referred to in that statement are now proceeding, no information is at present available regarding them.

Oral Answers to Questions — AGRICULTURE.

POTATO PRODUCTS (IMPORTS).

Mr. LIDDALL: 11.
asked the Minister of Agriculture whether his attention has been drawn to the large and increasing imports of starch, dextrine, farina, and potato flour; and, in view of the assistance that a reduction of those imports would give the potato-growers, what action he contemplates taking in the matter?

The MINISTER of AGRICULTURE (Mr. Elliot): While there was some increase in the imports of these products in 1934, as compared with the two previous years, imports last year were less than in 1931 and the quantities imported in the first five months of the present year were approximately the same as in the corresponding period of 1934. As regards the second part of the question, the Potato Marketing Board are actively considering the problem of finding profitable outlets for potatoes surplus to human consumption requirements. It is open to the parties concerned to make an application to the Import Duties Advisory Committee for the imposition of duties or additional duties on foreign potato products which may compete with home supplies.

Mr. LIDDALL: Will the right hon. Gentleman do his utmost to encourage the erection of factories in this country?

Mr. ELLIOT: That is being actively considered by the Potato Marketing Board.

Mr. HAMMERSLEY: In considering this matter, will the right hon. Gentleman bear in mind that these materials are used in the textile trade and that it is essential that this trade should be able to produce at the lowest possible price?

Mr. ELLIOT: That is no doubt why the Import Duties Board took action.

MILK REORGANISATION COMMISSION.

Brigadier - General CLIFTON BROWN: 12.
asked the Minister of Agriculture whether he has yet received the report of the Milk Reorganisation Commission or, if not, when does he expect them to report?

Mr. ELLIOT: The Milk Reorganisation Commission are still engaged in taking evidence from a large number of organisations in England and Scotland, and it is too early yet to say when their report may be expected.

Brigadier-General CLIFTON BROWN: May I ask whether in view of the fact that new milk contracts must be made by next October and the necessity of amending the present scheme and abolishing some of the grievances before that date, he can urge on the report of the Commission?

Mr. ELLIOT: I do not wish to suggest that the commission is not directing its attention very keenly to these important problems.

IMPORT DUTIES (FEEDING STUFFS).

Mr. DUNCAN GRAHAM (for Mr. LEONARD): 55.
asked the Chancellor of the Exchequer the approximate amount of Customs Duties collected on feeding-stuffs for animals in each of the years 1931 to 1934?

Mr. COOPER: The revenue derived from the articles classified in Class I, Group B, of the Official Trade Accounts for the calendar years 1932 (when the articles in question first became liable to duty) to 1934 was as follows:

£


1932 (from 1st March)
…
287,000


1933
…
355,000


1934
…
413,000

No information is available of the revenue derived from imported grains (e.g., wheat, barley, oats, maize) and other articles intended for use as feeding stuffs for animals, as distinct from their use for other purposes.

SOYA BEANS.

Brigadier-General NATION: 17.
asked the Minister of Agriculture whether be has made any inquiries into the possibility or otherwise of growing soya beans in the United Kingdom for commercial purposes; and, if so, whether he will give the House such information on the subject as he possesses?

Mr. ELLIOT: The Ministry has no further information on this subject beyond what I gave on 1st May in reply to a question by the hon. Member for Plaistow (Mr. Thorne), of which I am sending my hon. and gallant Friend a copy.

Captain HEILGERS: May I ask whether the result of the experiments referred to in his reply on 1st May have been published?

Mr. ELLIOT: Yes, Sir. There is a book, published by the Oxford University Press, on the soya bean by Miss Elizabeth Bowdidge.

SULPHATE OF AMMONIA (IMPORT DUTY).

Dr. ADDISON: 20.
asked the Minister of Agriculture whether his attention has been drawn to the negotiations between the National Farmers Union and the British Sulphate of Ammonia Federation and Imperial Chemical Industries, Limited, with regard to the withdrawal of the opposition of the National Farmers Union before the Import Duties Advisory Committee to the application of Imperial Chemical Industries, Limited, for increased duties on imported sulphate of ammonia; and whether bargains of this character are reported by his Department to the Import Duties Advisory Committee before their decisions are arrived at?

Mr. ELLIOT: The answer to the first part of the question is in the affirmative. I understand that the Import Duties Advisory Committee were fully informed, by the parties themselves, of these negotiations and of the terms of the agreement which had been reached.

CATTLE DISEASE (WARBLE FLY).

Mr. BURNETT: 21.
asked the Minister of Agriculture whether his attention has been drawn to the test which was taken in Aberdeen hide market for the eight weeks commencing 12th April, in the course of which it was ascertained that the weekly percentage of warbled hides varied from 54 to 67; and whether, seeing that demonstrations of the efficacious treatment of infected cattle were held more than a year ago in Scotland, he will consider the adoption of general and compulsory measures?

Mr. HENDERSON STEWART: 18.
asked the Minister of Agriculture whether he has reached any decision on the proposal to make compulsory the regular dressing of cattle for the extermination of the warble fly?

Mr. LEONARD: 19.
asked the Minister of Agriculture when he will be able to give a decision upon the representations made to him by interested organisations calling for a compulsory dressing order as a means of eradication of the warble fly from cattle?

Mr. ELLIOT: The answer to the first part of the question by my hon. Friend the Member for Aberdeen, North (Mr. Burnett) is in the affirmative. The practicabliity of general and compulsory measures is being actively explored, but I am not at present in a position to add to the answer I gave on 9th April to a question on this subject by the hon. and gallant Member for Caernarvonshire (Major Owen).

Mr. BURNETT: Has the right hon. Gentleman considered the question of trying this experiment in Scotland?

Mr. ELLIOT: I am afraid that if I tried to exercise any jurisdiction in Scotland I should be expelled by the Scottish authorities.

Mr. BURNETT: Does the right hon. Gentleman suggest that I should address the question to the Secretary of State for Scotland?

Oral Answers to Questions — BEET-SUGAR INDUSTRY (SUBSIDY).

Mr. THORNE: 14.
asked the Minister of Agriculture the total amount of subsidy paid up to the financial year ended
31st March, 1935, to the English Sugar Beet Company, the King's Lynn Sugar Beet Company, the Ely Beet Sugar Company, and the Ipswich Beet Sugar Company; and whether he will take steps to obtain particulars of the dividends paid by these companies for the years 1933–34 and 1934–35 and the manner in which the £740,000 in cash bonuses were distributed?

Mr. ELLIOT: As the answer involves a large number of figures I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Mr. THORNE: Can the right hon. Gentleman say in a sentence how the £740,000 is distributed?

Mr. ELLIOT: I am afraid not. It covers nearly two sheets of figures.

Following is the answer:

The total amount of subsidy paid, under the British Sugar (Subsidy) Act, 1925, and subsequent legislation, to the four Sugar Beet Companies in question up to the 31st March, 1935, is £11,874,813.

The dividends paid by these companies in respect of the years 1933–34 and 1934–35 are as follow:

—
Amount.
Rate.


English Beet Sugar Corporation:
£
Per cent.


1933–34
75,000
15 free of tax.


1934–35
100,000
20 free of tax.


King's Lynn Beet Sugar Factory:




1933–34
27,000
6 free of tax.


1934–35
36,000
8 free of tax.


Ely Beet Sugar Factory:




1933–34
56,250
12½ free of tax.


1934–35
67,500
15 free of tax.


Ipswich Beet Sugar Factory:




1933–34
24,000
6 free of tax.


1934–35
28,000
7 free of tax.

I have no official information on the subject, but according to information in the Press the manner in which the sum of £740,000 was recently distributed in cash bonuses was as follows. The amounts shown were distributed among shareholders in proportion to the number of shares held by them on 9th May, 1935.

£



English Beet Sugar Corporation.
300,000
Allocated from General Reserve.


Ely Beet Sugar Factory.
270,000
Allocated from Capital Reserve.


30,000
Allocated from General Reserve.


Ipswich Beet Sugar Factory.
4,000
Allocated from Capital Reserve.


136,000
Allocated from General Reserve.

Resolutions embodying these proposals were passed at Extraordinary General Meetings of the Companies on 17th May, 1935, and it was resolved that payment in each case should be made on 1st June, 1935.

Mr. OSWALD LEWIS: 15.
asked the Minister of Agriculture whether the Government intend to come to a definite decision as to the recommendations of the United Kingdom Sugar Industry Inquiry Committee within the next six months?

Mr. ELLIOT: Yes, Sir.

Mr. LEWIS: Can the right hon. Gentleman say approximately when the results of these decisions will be communicated to the House?

Mr. ELLIOT: The results will be communicated to the House as soon as they are reached. It may be possible to communicate them before the House rises.

Oral Answers to Questions — TITHE RENT CHARGE.

Mr. OSWALD LEWIS: 16.
asked the Minister of Agriculture if he can now state when the Government hope to receive the report of the Royal Commission on Tithe?

Mr. ELLIOT: No, Sir.

Oral Answers to Questions — FISHING INDUSTRY.

IMMATURE FISH.

Mr. LOFTUS: 22.
asked the Minister of Agriculture whether he is aware that in one year recently the Dutch cutters operating for the fish-meal factories of Holland caught about 350,000,000 undersized one- and two-year-old plaice and that the German shrimpers in one year recently caught 65,000,000 undersized one-and two-year-old plaice; and whether, in view of the present shortage of fish in the North Sea, he will take steps to endeavour to obtain international agreement to stop this destruction of immature
prime fish which is so detrimental to the interests of fishermen of all countries bordering on the North Sea?

Mr. ELLIOT: I am aware of the facts stated in the first part of the question. I fully appreciate the importance of international agreement to measures to prevent the destruction of undersized fish, and steps to that end are being taken by the International Council for the Exploration of the Sea, who at their annual meeting in 1934 recommended participating governments to adopt regulations not less drastic than those already in force in this country. One country has already put this recommendation into effect, and I understand that other countries, including Holland and Germany, have the question seriously under consideration.

UNEMPLOYMENT, LOWESTOFT.

Mr. LOFTUS: 23.
asked the Minister of Agriculture whether he is aware that the value of fish landed in Lowestoft during the first five months of this year is less by £102,000, a decrease of nearly 50 per cent. than the value of fish landed in the corresponding period last year; and whether, in view of the widespread unemployment and distress caused thereby, he will instruct the Sea Fish Commission to visit Lowestoft at an early date and present an interim report on the situation there?

Mr. ELLIOT: I am aware of the decreased landings of trawl fish at Lowestoft this year but, as I indicated in reply to a question by my hon. Friend on 11th April last, I am informed that the main cause is shortage of fish on the grounds usually fished by Lowestoft trawlers. The Sea-Fish Commission visited Lowestoft in June, 1934, in connection with their inquiry into the herring industry. They are now engaged in a series of visits to ports in connection with their white fish in-investigation and I understand that they will again visit Lowestoft. I do not, however, think it advisable to ask them to interrupt their programme of work in order to make an interim report on this particular question.

Mr. LOFTUS: Will the right hon. Gentleman see that the Sea-Fish Commission visit Lowestoft in ample time to give notice to terminate the trade agreement fixing a quota on the import of fish? Will he also consider the question of substituting tariffs instead of quotas as a means of helping the fishing industry?

Mr. ELLIOT: I will certainly consider these matters. As for the Sea Fish Commission, I think it will be best to leave them to arrange their own programme of work, but I shall be happy to communicate the hon. Member's suggestion to them.

Mr. LOFTUS: 24.
asked the Minister of Agriculture whether, in view of the condition of the trawl market in Lowestoft and the possibility of many of the fish merchants having to close down, he will consider arranging that a certain proportion of the Danish and Norwegian fish landed in this country under the present quotas shall be landed in Lowestoft?

Mr. ELLIOT: I am causing inquiries to be made locally with a view to further consideration of my hon. Friend's suggestion, but it will be appreciated that the matter is one primarily for the Danish and Norwegian Governments, in whose hands rest the control of their exports of fish to this country.

SUPPLIES (LANDING RESTRICTIONS).

Mr. D. GRAHAM (for Mr. LEONARD): 13.
asked the Minister of Agriculture what answer he has made to the representations made to him by the National Federation of Fish Friers, protesting against the lack of suitable fish during June, July, August, and September, due to the orders restricting the landing of fish from certain waters, their inability to meet the rising costs for potatoes, and to continue to supply the needs of their customers, mainly small wage earners?

Mr. ELLIOT: I have informed the Federation that I considered that it was desirable to gain further experience of the effect of the Northern Waters Order. The tendency so far this year has been for lower prices for white fish than in 1934, and the general level of port prices is well below the 1929 level.

Oral Answers to Questions — POST OFFICE.

TELEPHONE SUBSCRIBERS (TELEGRAMS).

Mr. BURNETT: 25.
asked the Postmaster-General whether his attention has been drawn to the fact that a member of the public using a public kiosk for telephoning a telegram has only the cost of
the telegram to bear, whereas a telephone subscriber using his private telephone is charged, in addition to the charge for the telegram, 1d. per call; and whether he will take steps to have subscribers placed in a not less favourable position than non-subscribing members of the public?

The POSTMASTER-GENERAL (Major Tryon): The object of waiving the call office fee in the case of telegrams dictated from kiosks is, by treating call Offices virtually as post offices, to facilitate the handing in of telegrams by the general public at all hours of the day and night. Telephone subscribers have the advantage over call office users of being saved the inconvenience of having to visit a post office or call office to hand in their telegrams. To waive the penny fee in their case would involve a heavy loss of revenue which I do not feel justified in incurring until the numerous concessions recently made to users of the telegraph and telephone services have been in force long enough for their financial effects to be ascertained.

Mr. BURNETT: Is the Postmaster-General afraid that my constituents in Aberdeen may withdraw their telephone subscriptions in order to get cheaper telegrams?

POSTAL SERVICES, MANCHESTER.

Mr. CHORLTON: 26.
asked the Postmaster-General whether he will consider improving the postal service within a 25-mile radius of Manchester so that express-letter charges will not be necessary for letters posted at noon for delivery the same day?

Major TRYON: Correspondence posted up to 12 noon at the Newton Street sorting office, Manchester, for towns of any size within a 25-mile radius, secures delivery the same day, and correspondence posted at or after noon at nearly all the head offices of these towns secures delivery within the central area of Manchaster. If my hon. Friend will say what places he has in mind, I shall be glad to make specific inquiry.

Mr. CHORLTON: Can the Postmaster-General tell me the rates within a 25 miles radius, and the times?

Major TRYON: I have a long list in my hand showing the times at which
letters have to be posted in Manchester to reach neighbouring towns the same day, and in many cases the times are more favourable than that suggested by the hon. Member.

Mr. RHYS DAVIES: Will the right hon. Gentleman see that any advantages given to Manchester shall be given to all other towns in the country?

CONTRACTS (FAIR WAGES CLAUSE).

Mr. TINKER: 28.
asked the Postmaster-General what steps his Department take to ensure that the recognised trade union conditions as to working conditions, i.e., wages and hours, are carried out by those who get the contracts to carry Post Office and telephone work?

Major TRYON: Every Post Office contract includes a fair wages clause embodying the fair wages resolution, and every contractor has to exhibit a copy of this clause and of any recognised agreement determining wages and hours in the industry in the district in question, for the information of the workpeople concerned. Where there is reason to suppose that the terms of the fair wages clause are not complied with, full inquiry is made.

Mr. TINKER: Seeing that there has been considerable trouble recently in regard to the fair wages clause not being observed, will the right hon. Gentleman give more advertisement as to the way in which information regarding this matter can be obtained?

Major TRYON: I am much obliged to the hon. Member, and I hope that the question and answer will help to clear the matter up.

Mr. THORNE: Can the right hon. Gentleman say whether these contracts are printed in the Labour Gazette. Would not that afford an opportunity of traders to learn the terms of the contract?

Major TRYON: That is not a matter for this Department; the contractors sign the contract to keep the fair wages clause. Sometimes difficulties are settled satisfactorily through the trade unions, and sometimes the Post Office has to intervene to get better terms. As a rule, however, it is done without our intervention.

Mr. DICKIE: Does the right hon. Gentleman think that a contractor who pays 4½d. an hour is observing the fair wages clause?

Major TRYON: That question does not arise, and I would refer the hon. Member to the answer which was given at the time to that question.

Oral Answers to Questions — HOUSE OF COMMONS (MEMBERS ACCOMMODATION).

Mr. WEST: 31.
asked the First Commissioner of Works whether anything can be done to improve the amenities of the Members' private room and the smoke room on the Terrace?

The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): If the hon. Member will put forward his suggestions as to the improvements considered desirable by Members through the proper authority, namely, the Sergeant-at-Arms, I shall be willing to consider them.

Mr. WEST: Does the right hon. Gentleman realise that hon. Members regard the rooms in question as special distressed areas, and cannot he do something to make them less depressing and more comfortable?

Mr. ORMSBY-GORE: I do not think they are more depressing than any of the others. I do not know what particular grievance the hon. Member has. The rooms are all very similarly furnished.

Mr. THORNE: When the right hon. Gentleman has a few minutes to spare, will he come down with me and see the rooms?

Mr. ORMSBY-GORE: I have been down there occasionally to spy out the land, and I have thought that the hon. Member and his friends had claimed a very favourable niche.

Mr. THORNE: Will the right hon. Gentleman come down and take a cup of tea with me there some time?

Captain PETER MACDONALD: Is not the most depressing room in the House the one monopolised by the Socialist party, because no other party is allowed in it?

Mr. THORNE: Is the right hon. Gentleman aware that there are only about six Members occupying the room in question?

Oral Answers to Questions — HIGH COURT JUDGES.

Sir WILLIAM DAVISON: 32.
asked the Attorney-General whether he is aware that, notwithstanding the recent appointment of additional judges, there are still a large number of civil cases awaiting trial in the High Court; whether steps will be taken to secure the appointment of further additional judges in addition to the filling of existing vacancies in order to dispose of the arrears which still continue; and whether the appointment of official shorthand writers in the High Court will be considered in order to save the time of the judges in making a longhand resume of the proceedings in case of a possible appeal to a higher court?

Lieut.-Colonel Sir A. LAMBERT WARD (Vice-Chamberlain of the Household): I have been asked to reply. Substantial progress has been made in the reduction of the numbers of civil cases awaiting trial in the High Court. The questions of the number of judges required for the efficient discharge of the work of the King's Bench Division and whether a shorthand note should be taken of cases tried in the High Court are under the consideration of the Commission presided over by Earl Peel.

Sir W. DAVISON: I am much obliged for that answer, but do the Government not recognise that the cheap and expeditious trial of cases is a matter of the first importance, and, seeing that judges earn more in fees than their salaries, is there any reason why there should be these hundreds of cases awaiting trial?

Sir A. LAMBERT WARD: I will communicate that suggestion of my hon. Friend.

Lieut. - Colonel Sir ARNOLD WILSON: 49.
asked the Prime Minister whether his attention has been drawn to an article under the signature of Lord Hewart of Bury, as Lord Chief Justice of England and a signatory of the treaty of December, 1921, between Great Britain and Ireland, commenting upon and explaining the purport and possible effects of recent decisions of the Judicial Committee of the Privy Council announced on 6th June; and whether he will invite His Majesty's Judges voluntarily to apply to themselves the restrictions in respect of communications to the Press adopted by His Majesty's advisers and announced to
this House on 3rd March, 1927, and which bind all civil servants?

The PRIME MINISTER: My attention has been called to this article. I do not propose to communicate to His Majesty's Judges in the sense suggested by my hon. and gallant Friend. It is obviously undesirable that His Majesty's Judges should write for publication on matters of political controversy or on questions upon which they may have to decide judicially, but the limit of action in this respect must be left to the good sense of each individual Judge.

Oral Answers to Questions — UNEMPLOYMENT.

ARMY RESERVISTS.

Miss WARD: 33.
asked the Minister of Labour under what statutory authority the Unemployment Assistance Board is acting in taking into consideration in the assessment of need Army Reserve pay due while W. D. Bell, of Willington Quay, Northumberland, is drawing standard benefit?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Lieut.-Colonel Muirhead): Under the Unemployment Assistance Act the Board may grant an allowance only to a person who proves that he is in need, and the Regulations made under the Act require that for the purpose of determining need account must be taken of the available resources. The Board are advised that available resources are resources which are, in fact, available when the application for an allowance is considered, irrespective of the period over which they may have accrued.

Miss WARD: In view of the fact that Army Reservists are the only class of person whose income is assessed after it is due, when the new regulations are introduced will they take into consideration what appears to be an injustice to one section of the community?

Lieut.-Colonel MUIRHEAD: I could not make any promise.

Mr. DICKIE: Do we understand that these deductions are legal in the case of standard benefit also?

Lieut.-Colonel MUIRHEAD: This is properly an unemployment assistance case, not a benefit case.

TEXTILE INDUSTRY (WEAVERS).

Mr. CROSS: 34.
asked the Minister of Labour whether he is aware that cotton weavers working full time on two looms at normal wage rates may earn less than would be payable to them in benefit or assistance allowances if unemployed, and that the Unemployment Assistance Board cannot grant allowances in supplementation of wages in any such cases; and whether he will introduce legislation to enable the Board to grant such allowances in cases where the Board is satisfied that the working of less than the normal complement of looms cannot reasonably be avoided by the manufacturer?

Lieut.-Colonel MUIRHEAD: I am aware of the situation to which the question refers, but I am afraid that my right hon. Friend could not support a proposal of the kind which my hon. Friend indicates.

Mr. RHYS DAVIES: In view of the fact that the wages paid in some cases in the textile industry of Lancashire to adult men working a full week amount to less than public assistance, will the Government be good enough to try to do something, if it cannot provide public assistance to enhance wages, to get the employers to pay such a wage that it will not be necessary for the men to go to public assistance?

Lieut.-Colonel MUIRHEAD: We are, of course, anxious that the men should receive as high wages as possible, but the question of subsidising wages raises difficulties of which the hon. Member is aware.

Mr. DAVIES: Is it not possible for the Ministry of Labour to make representations to the employers in the textile industry of Lancashire to see that they do not pay such wages that it is necessary to supplement them with public assistance?

Mr. CROSS: Is it not a fact that these are not really full wages, and that the position is that these people are doing half-work, and not full work, but are occupying full time over it?

Captain Sir WILLIAM BRASS: Would my hon. and gallant Friend take into consideration the fact that this affects dependants' allowances as well as the others?

Lieut.-Colonel MUIRHEAD: I will take note of that statement.

Oral Answers to Questions — SLAG HEAPS.

Mr. TINKER: 37.
asked the Minister of Health what number of local authorities have made application to his Department for loans for the purpose of levelling down slag heaps; and if they have been sanctioned or refused?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): My right hon. Friend has received no applications for such loan sanctions.

Mr. TINKER: Is the hon. Gentleman aware of the difficulty on the question of the ownership of the land on which these slag heaps are? Would he get into touch with the authorities, to make some provision about taking over the land at a nominal price—it is of no value at all—so that it will pass into the hands of the authorities?

Mr. SHAKESPEARE: All we can do is to say that if we receive applications for schemes we will consider the schemes on their merits.

Oral Answers to Questions — HOURS OF WORK (REDUCTION).

Dr. ADDISON: 35.
asked the Minister of Labour whether the action recently taken by Mr. Leggatt, of his Department at Geneva, in regard to the possible limitation of working hours was in accordance with instructions issued by himself or his predecessor; and, if so, the nature of the instructions concerned?

Lieut.-Colonel MUIRHEAD: The British Government delegates at the International Conference at Geneva have been acting in accordance with instructions given them by His Majesty's Government on the basis of the policy of the Government on the various subjects on the agenda of the Conference. It is not possible within the limits of this reply to detail the policy of the Government in regard to hours of work, but I would refer the right hon. Member to the White Paper Cmd. 4584, which gives the reply of the Government to a questionnaire issued by the International Labour Office on the subject of the reduction of hours of work.

Dr. ADDISON: May we take it that it is the policy of the Government to oppose a reduction of hours even when a large
number of other nations are willing to reduce them?

Lieut.-Colonel MUIRHEAD: No, the right hon. Gentleman has no ground for making that assumption. The policy of the Government is set out in the Command Paper to which. I have alluded, and it presents the difficulties of the situation and the Government's attitude on it.

Sir. P. HARRIS: Has the Government delegate any power or discretion to negotiate, or is he strictly tied by the terms of the instructions given to him? Has he any discretion to try to bargain with other nations for a decrease in the number of hours?

Lieut.-Colonel MUIRHEAD: Our representative there had his instructions, but in case of any altered circumstances, which sometimes do arise on these matters, naturally he, like everybody else, must exercise his discretion.

Mr. WEST: Because of the longer hours worked in certain Continental countries—hours which are injurious to our own industries—is it the policy of the Government to refrain from encouraging a reduction of hours?

Oral Answers to Questions — PUBLIC HEALTH (INFECTIOUS DISEASE CASES, SUNDERLAND).

Mr. STOREY: 38.
asked the Minister of Health whether he has considered correspondence submitted to him by the Sunderland Children's Hospital with reference to the refusal of the health committee of Sunderland Corporation to remove to the borough hospital for infectious diseases two children whose homes are outside the borough, and who were found to be suffering from cerebrospinal meningitis after a short period of observation in the hospital, until such time as the hospital authorities have made arrangements with the local authority in the area in which the children reside for the payment of the cost of their maintenance and treatment; and what steps he proposes to take to ensure that infectious cases are in future removed promptly from this general hospital to the infectious diseases hospital?

Mr. SHAKESPEARE: My right hon. Friend has received the correspondence
referred to and he will communicate with the Sunderland Town Council in the matter.

Oral Answers to Questions — BECHUANALAND.

Earl WINTERTON: 39.
asked the Secretary of State for Dominion Affairs whether any economic development, wholly or partly under Government auspices, is in progress or contemplated in the Bechuanaland Protectorate?

The UNDER-SECRETARY of STATE for DOMINION AFFAIRS (Lord Stanley): Financial assistance from the Colonial Development Fund amounting to about £65,000 has been granted or approved in respect of various schemes including those recommended by the Commission appointed to inquire into the financial and economic position of the Bechuanaland Protectorate. Of this sum £25,000 is in respect of the improvement of water supplies.

Oral Answers to Questions — OLD AGE PENSIONS.

Mr. SANDYS: 40.
asked the Secretary of State for Dominion Affairs whether he will consider the possibility of making reciprocal inter-Imperial arrangements under which British subjects who would have been eligible for old age pensions in one part of the Empire had they not moved to another part of the Empire should not on that account forfeit their rights to old age pensions?

Lord STANLEY: The question of reciprocity in old age pensions has been considered at Imperial Conferences, but it has not hitherto been found practicable to institute any reciprocal schemes. My hon. Friend will, however, no doubt be aware that the payment of pensions awarded under the Widows', Orphans' and Old Age Contributory Pensions Acts of 1925 and 1929 is continued in the case of persons migrating to any part of the Empire, while insured persons below pension age leaving the United Kingdom are afforded the opportunity of maintaining their pensions insurance by the continued payment of the appropriate contributions after arrival overseas.

Mr. SANDYS: Can my Noble Friend assure us that he will take every opportunity at future Imperial Conferences to try to reach a scheme, in view of the
great hardship which exists in some of these cases?

Lord STANLEY: Yes, in so far as it affects my Department.

Oral Answers to Questions — EDUCATION (READING SCHOOL: PUPIL'S SUSPENSION).

Mr. THORNE: 41.
asked the President of the Board of Education whether he can give the House any information about the 18-years-old schoolboy who was suspended by the headmaster of Reading School; whether he has seen a copy of the statement the boy in question had to sign before he was allowed to return to school; and whether he intends taking any action in the matter?

The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Ramsbotham): I have seen accounts of this incident in the newspapers to the effect that a pupil at Reading School took part in the distribution of anti-war pamphlets on the occasion of the inspection of the Officers' Training Corps. I am not aware that the boy in question was asked to sign any statement before being allowed to return to school. His suspension was a matter of discipline within the discretion of the headmaster, and I do not see that any action on my part is called for.

Mr. THORNE: While I do not want to suggest that the hon. Gentleman is giving me an evasive answer, may I ask whether it is the case that the statement was drawn up by the headmaster and that it was published in all the papers?

Mr. RAMSBOTHAM: I think the hon. Member is mixing up this and another version of what happened. According to the report, the undertaking or apology in writing was asked for by the headmaster from three old boys of the school and not from the boy in question, who is a member of the school.

Mr. THORNE: Had they committed the same offence?

Oral Answers to Questions — BRITISH ARMY (RESERVISTS' PAY).

Miss WARD: 42.
asked the Financial Secretary to the War Office whether, in view of the instructions contained in the
Appendix to Command Paper 4791, which relate to Army reservists, he will arrange to have the payments made weekly?

Sir WALTER WOMERSLEY (Lord of the Treasury): I have been asked to reply. My right hon. Friend regrets that to alter the present system, whereby a reservist is paid quarterly in arrear, would be impracticable owing to the extra work and expense that would be involved.

Miss WARD: Is it for the convenience of the War Office that these reservists' payments are made quarterly, or for the benefit of the reservists?

Sir W. WOMERSLEY: I need not point out to my hon. Friend that the change suggested would mean 52 transactions per reservists per year, instead of four, and would involve a great deal of work in the Department and perhaps a great deal of inconvenience to the reservists. My answer to her question therefore is that quarterly payments are in the interests of both.

Miss WARD: In view of difficulties arising out of the receipt of transitional payments, will the hon. Gentleman make representations to the Minister of Labour on the point that it is mostly for the benefit of the War Office that these payments are made quarterly?

Sir W. WOMERSLEY: I will report my hon. Friend's suggestion to both my right hon. Friends.

Mr. DICKIE: Will the hon. Gentleman make representations to the Secretary of State for War asking him to protect these reservists against illegal deductions by another Department?

Oral Answers to Questions — POISONS REGULATIONS.

Captain P. MACDONALD: 43.
asked the Secretary of State for the Home Department whether he has yet considered the report of the Poisons Board with regard to the new poisons regulations and lists; whether he proposes to make any Amendments thereto; and, if not, by what date it is proposed to lay the order for the enforcement of these proposals before Parliament?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Captain Euan Wallace): Notice of my right hon. Friend's intention to confirm the Poisons List, prepared and submitted to him by the Poisons Board, and to make Rules under Section 23 of the Pharmacy and Poisons Act, 1933, was published on the 18th of this month. I cannot say what Amendments, if any, will be made in the draft List and Rules until my right hon. Friend has considered such representations as he may receive in regard to them. The Rules and the Order confirming the Poisons List will, as required by the Act, be laid before Parliament as soon as they are made.

Oral Answers to Questions — JUVENILE OFFENDERS (IMPRISONMENT).

Mr. LOVAT-FRASER: 44.
asked the Home Secretary whether in view of the widespread condemnation of the practice of sending young people under 21 years of age to prison, he will circularise the magistrates, pointing out the dangers and mischievous results of this practice?

Captain WALLACE: The treatment of young offenders was dealt with at length in a circular issued to all Courts of Summary Jurisdiction on the 20th July, 1928, of which I am sending my hon. Friend a copy. In this circular attention was called to the objections to imprisonment for young offenders under 21 and to the alternatives available to the courts.

Mr. LOVAT-FRASER: Has the hon. and gallant Gentleman read the pronouncement of the Lord Chief Justice upon this practice which was uttered a few days ago?

Captain WALLACE: It seems to me that this more or less covers exactly what the Lord Chief Justice said.

Mr. GODFREY NICHOLSON: Will the hon. and gallant Gentleman take steps to encourage magistrates to refrain from sending juvenile offenders to prison for very short periods which can do no good whatever?

Captain WALLACE: My hon. Friend is no doubt aware of the alternatives available and of the fact that there is a strict limit to what we can do in the way of encouraging magistrates.

Oral Answers to Questions — SELECT COMMITTEE ON WITNESSES (REPORT).

Earl WINTERTON: 45.
asked the Prime Minister whether an opportunity will be afforded to discuss the Report of the Select Committee on Witnesses?

The PRIME MINISTER: Yes, Sir. The Government hope to afford an opportunity to discuss the Report of the Select Committee on Witnesses before the House rises for the Summer Recess.

Oral Answers to Questions — ROYAL AIR FORCE (SUPPLEMENTARY ESTIMATE).

Earl WINTERTON: 46.
asked the Prime Minister whether the recent increase in the personnel and material of the Royal Air Force will involve a Supplementary Estimate, and whether that Estimate will be brought before the House prior to the close of the present Session?

The PRIME MINISTER: Yes, Sir. A Supplementary Air Estimate will be presented this Session but I am not in a position to name a precise date.

Mr. CHURCHILL: Can the Prime Minister assure us that before this Supplementary Estimate is actually brought on to be debated in Committee, we shall have laid before us a White Paper setting forth the general scope of the proposals and explaining them?

The PRIME MINISTER: I will bear my right hon. Friend's request in mind. I have no knowledge yet of what the Estimate will comprise, or how wide its scope may be.

Mr. CHURCHILL: Will my right hon. Friend also bear in mind the obvious inconvenience under which the House lies, if a very important and complicated statement is made by a Minister, and then, when a new situation has been created, the House is expected to debate the matter immediately?

The PRIME MINISTER: Yes, Sir, I will keep that point in mind.

Sir P. HARRIS: Does delay not give an opportunity for negotiations with other countries to continue, in the hope that it may not be necessary to have such a largely increased Estimate?

The PRIME MINISTER: Yes, that is true, but in my experience the delays
required are rather longer than the period which will be needed before the Estimate is presented.

Earl WINTERTON: May we be clear upon this? My right hon. Friend surely does not mean by the phrase "that is true" in his last reply, that there has been any delay in regard to the promise made to the House the other day as to the expansion of the Air Force?

The PRIME MINISTER: No, Sir.

Commander OLIVER LOCKER-LAMPSON: Is my right hon. Friend aware that we have only five weeks to go?

Oral Answers to Questions — NATIONAL UNION OF DISTRIBUTIVE WORKERS.

Mr. RHYS DAVIES: 47.
asked the Prime Minister whether he has considered representations submitted by the National Union of Distributive Workers on the Incitement to Disaffection Act, the Unemployment Assistance Board, State pensions, and the extension of the Unemployment Insurance scheme; and what reply has been tendered?

The PRIME MINISTER: I have seen the representations submitted by the National Union of Distributive and Allied Workers, to which the hon. Member refers. The resolutions in question have been noted.

Mr. DAVIES: Can the right hon. Gentleman tell us whether the Government intend to do anything more than take note of the representations of this body?

The PRIME MINISTER: The letter requested that due attention should be given to the resolutions and due attention has been given to them.

Oral Answers to Questions — INDUSTRIAL ACCIDENT, SCUNTHORPE.

Mr. THORNE: 51.
asked the Home Secretary whether he has received a report from his factory inspector in connection with the fatal accident that happened at the Redbourne Steel Works, near Scunthorpe; and whether he can state the cause of the accident?

Captain WALLACE: Yes, Sir; this accident was due to overwinding the gear used for hoisting some men engaged on the erection of a new blast furnace. The case is being followed up.

Oral Answers to Questions — RACECOURSE BETTING CONTROL BOARD (GRANTS).

Mr. ANSTRUTHER-GRAY: 53.
asked the Home Secretary which racecourse operating under National Hunt rules received the largest grant from the Racecourse Betting Control Board last year; to how much this amounted; and whether it was given for any specific purpose?

Captain WALLACE: Under the scheme approved by my right hon. Friend's predecessor, the largest grant paid to the owners of a racecourse operating under both Jockey Club and National Hunt rules was a sum of £221 paid to the owner of Gatwick racecourse, £151 being in respect of meetings held under Jockey Club rules and £70 in respect of meetings held under National Hunt rules. The largest grant in respect of a, racecourse operating under National Hunt rules only was £99 paid to the owners of Cheltenham racecourse. In both cases the grants were made for the purpose of increasing the added money to stakes.

Oral Answers to Questions — BRITISH UNION OF FASCISTS (DISTURBANCE, BOOTLE).

Mr. CLEARY: 52.
asked the Home Secretary whether he can make a, statement regarding a Fascist meeting held at Bootle, on the 18th instant, where a woman was found dead on the ground, and where there was grave disorder and damage done?

Captain WALLACE: Yes, Sir. My right hon. Friend has obtained a report from the Chief Constable of Bootle who states that the Fascist meeting, held at Bootle on the 18th instant, was attended by a crowd of about 500 persons consisting mostly of women and children. During the meeting considerable noise was caused by the children and by a small section of the crowd. At the end of the meeting, about 9.45 p.m., 12 Fascists in uniform were about to board a motor van, the roof of which had been
used as a platform by the speaker, when fighting broke out between several of the uniformed Fascists and the hostile section of the crowd. The police separated the combatants and the van moved off through the crowd, its progress being facilitated by the police. It then came to the knowledge of the police that a woman in the crowd had fainted. First aid was rendered, but as she did not recover she was removed by ambulance to Bootle hospital where she was found to be dead. The coroner has ordered a post mortem examination, and I understand that the inquest, which was opened last Friday, has been adjourned to to-morrow. It is not possible pending the result of the inquest to give any information as to the cause of the woman's death.

Mr. CLEARY: Will the hon. and gallant Gentleman's Department continue to watch this matter?

Captain WALLACE: Most certainly, but, as the hon. Member will realise, it is at present sub judice.

Oral Answers to Questions — TRANSPORT.

DRIVING TESTS (AGRICULTURAL TRACTORS).

Brigadier-General BROWN: 57.
asked the Minister of Transport whether he is aware that drivers of agricultural tractors only are being asked to pass a test for general driving and are only being issued a three months' licence till they do so; and, in view of the impossibility of driving an agricultural tractor many miles along roads to the rendezvous for a driving test and of the handicap, expense, and hindrance to farm operations caused thereby, whether he will amend the regulations as regards driving tests by abolishing the test when the application for a driving licence is to drive an agricultural tractor only?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Captain Austin Hudson): Instructions have already been given that, in the case of the drivers referred to by my hon. and gallant Friend, examiners should make every effort to arrange the test at a convenient rendezvous. My right hon. Friend has no power under Section 6 of the Road Traffic Act of 1934 to make regulations exempting drivers of any particular class of vehicle from the necessity of undergoing a test.

Brigadier-General BROWN: Does that mean that the test will be for driving an agricultural tractor only? Does my hon. and gallant Friend think that some of the testers could drive the tractors themselves?

Captain HUDSON: I do not think I can add to the answer I have given, except to say that, keeping within the Act, we are doing our very best to see that these drivers are treated as well as possible.

Brigadier-General BROWN: Then why cannot they test them without the test for lorries and confine it to the agricultural tractors only? These men never want to drive anything except a tractor and they never have any chance to do it, so why should they have to do the other tests?

Captain HUDSON: My right hon. Friend cannot, without an amending Bill, alter the provisions of an Act passed by this House. Perhaps if my hon. and gallant Friend has a particular case in mind, he will communicate further with me upon it.

Brigadier-General BROWN: Yes, I have cases, but why not have an amending Bill?

CITY OF LONDON (TRAFFIC CONGESTION).

Mr. REMER: 58.
asked the Minister of Transport whether, with a view to remedying the traffic congestion and delays in King William Street, Queen Street, and Queen Victoria Street, he will suggest to the Corporation of the City of London the widening of Thames Street from Tower Hill to Blackfriars?

Captain A. HUDSON: This matter in its general aspect is already, I understand, under the consideration of the Corporation of the City of London. The possible means of relieving congestion in these streets are also being closely studied as part of the survey of highway developments required in the London area which my right hon. Friend recently announced.

Mr. REMER: What steps does the Minister intend to take to see that the City Council get on with their work considerably faster than they have done in the past few years, as this is causing great inconvenience in the City of London?

Captain HUDSON: I think my answer covered that point. The matter is being inquired into under the general survey.

Sir VANSITTART BOWATER: Is my hon. and gallant Friend aware that the bottle neck part of Queen Victoria Street will in due course be demolished and so widened as to take four proper rows of traffic instead of three as at present?

Captain HUDSON: I am glad to hear that.

HYDE PARK CORNER (TRAFFIC CONDITIONS).

Sir W. DAVISON: 59.
asked the Minister of Transport whether he is aware of the serious obstruction to traffic at Hyde Park Corner by reason of the dangerous long tongue of pavement to the south of the Machine Gun Corps memorial; and whether he will approach the Westminster city council with a view to flattening out the pavement at this point so that it may be similar to the pavement to the south of the Royal Artillery memorial?

Captain A. HUDSON: The suggestion of my hon. Friend would, if adopted, reduce the weaving space between Constitution Hill and Grosvenor Crescent and thus increase rather than reduce the difficulties occasionally experienced by traffic at Hyde Park Corner. My right hon. Friend is, however, by no means satisfied with the conditions at this important junction and has already given instructions for a detailed examination of the layout and the traffic requirements with a view to seeing whether any improvements are practicable.

Sir W. DAVISON: I am much obliged for the information. If my hon. and gallant Friend will go there, he will see that the traffic proceeding from Constitution Hill to the West is brought in at right angles instead of coming in like the traffic round the Royal Artillery Memorial, which comes round gradually and slowly.

MOTOR VEHICLES (FIRE EXTINGUISHERS).

Mr. HALES: 60 and 61.
asked the Minister of Transport (1) whether he is aware that a large motor lorry, conveying a load of furniture, took fire on the road near Welwyn on the 11th June, and was completely destroyed together with its load; and whether, having regard to the frequency with which motor vehicles are burned on the road, he will consider the
suggestion that all motor vehicles should be fitted with fire extinguishers;
(2) whether his attention has been called to an accident, on the 2nd June, near Crawley, when a lorry in which four persons were travelling took fire and in which two of the passengers were burned; also, has his attention been drawn to a fire which occurred to a lorry standing in a timber-yard at Woolwich on 12th June when the driver, Fred Capon, of Eltham, in endeavouring to move the lorry, was badly burned about the arms and is now in St. Nicholas Hospital, Plumstead; and, having regard to these repeated burning accidents on the road, whether he will provide the obvious remedy and prevent a repetition of these occurrences?

Captain A. HUDSON: While my right hon. Friend cannot accept the contention that the presence of a fire extinguisher would in all cases minimise the seriousness of any accident which might occur, he is referring the question of the compulsory carrying of fire extinguishers to the Transport Advisory Council for a report.

Mr. HALES: May I ask the following conundrum, namely, why does the fitting of a taximeter to a private car make the fitting of a fire extinguisher compulsory?

SILENT PERIOD, NEWCASTLE-UNDER-LYME.

Mr. HALES: 62.
asked the Minister of Transport whether his attention has been drawn to the statement by the chief constable of Newcastle-under-Lyme, to the effect that, acting under his instructions, the drivers of the police patrol cars of Newcastle had for the last six months driven without any horn being sounded, the success of which experiment had convinced him of the advantage of this method of driving; and would he now consider extending the time of the zones of silence for the whole 24 hours in the borough of Newcastle-under-Lyme for one month?

Captain A. HUDSON: Yes, Sir, and my right hon. Friend has already indicated his willingness to entertain an application by any local authority to extend the "silent" period experimentally to the whole 24 hours.

Mr. HALES: Having regard to the fact that the Chief Constable of Newcastle-under-Lyme has already experimented
with his patrol cars, will my hon. and gallant Friend not make the order compulsory, seeing that the authorities are very backward in making application?

Captain HUDSON: If the local authorities will apply to the Ministry, we will consider their applications.

Sir W. BRASS: Will my hon. and gallant Friend communicate with this particular officer and ask how he was able to pass lorries during the six months without sounding his horn?

Oral Answers to Questions — REGENT'S PARK.

Captain WATERHOUSE (for Sir CYRIL COBB): 29.
asked the First Commissioner of Works whether he is aware that, notwithstanding consideration of the fees received, the use at intervals by a restricted number of persons of the tennis courts occupying a large area near the open-air theatre in the Regent's Park gardens deprives the general public on every day of the year of the enjoyment of this space as a lawn or flower garden; and whether he will transfer these tennis courts to a more suitable part of the park or seek permission to place them in the surplus space in Bedford College grounds, where there is available space for them?

Mr. ORMSBY-GORE: When I took over the old Botanical Gardens, now Queen Mary's Gardens, there were nine tennis courts. Two have been abolished this year, and two are occupied by the tent used on wet days by the open air theatre. The lease to the contractor for the remaining courts expires next February, and it will then be a matter for consideration as to how many, if any, shall remain. I am devoting the money available this year to further improvements on the south and south west sides of the gardens. Bedford College is not under my jurisdiction.

Captain WATERHOUSE (for Sir C. COBB): 30.
asked the First Commissioner of Works whether it is his intention to remove the cinders from the area near the open-air theatre and the tennis-courts in the Regent's Park gardens and to lay out the open space in a suitable manner?

Mr. ORMSBY-GORE: It is certainly my intention to lay out the whole of the garden in a suitable manner as funds can be made available.

Oral Answers to Questions — ESTIMATES.

Report from the Select Committee, with Minutes of Evidence and Appendices, brought up, and read.

Report to lie upon the Table, and to be printed.

Orders of the Day — FINANCE BILL.

Considered in Committee.

[Captain BOURNE in the Chair.]

NEW CLAUSE.—(Relief to Sur-tax payers.)

Whereas under Section forty-two of the Finance Act, 1927, Sur-tax is due and payable as a deferred instalment of Income Tax, it shall be provided that where a person assessed to Sur-tax dies (or ceases to be liable to Sur-tax) during the year following the year of assessment, the amount of Surtax payable in respect of the year preceding his death or cessation from liability shall be restricteed to the proportion of the year during which the person dying or ceasing to be liable was subject to taxation.—(Mr. D. G. Somerville.)

Brought up, and read the First time.

3.40 p.m.

Mr. D. G. SOMERVILLE: I beg to move, "That the Clause be read a Second time."
This new Clause is no new one to the Committee and was first moved in 1928. It was then defeated, although many Members voted for it. Negotiations with the Chancellor of the Exchequer followed, but he could not see his way to give way. The short and simple Section 6 of the Finance Act, 1912, reads as follows:
In the case of the death of a person liable to Super-tax during any year for which Super-tax is charged, a part only of the year's Super-tax shall be payable proportionate to the part of the year which has elapsed before the date of the death.
This section was repealed owing to the Sur-tax Sections in the 1928 Finance Act, which thereby created a liability on the estate of a Sur-tax payer who died after 5th April, 1929. This meant that when every existing Sur-tax payer was dead an additional £60,000,000 at least would have been collected from their estates. In other words, the limited liability of 1912 was removed by the Finance Act of 1928, and it really amounted to an additional form of Estate Duty. This creates considerable hardship on Sur-tax payers, particularly those who have little or no capital. They may have a large income, but may not have sufficient capital to enable the estate to meet this additional tax. I will give an example which emphasises the point. A taxpayer receiving a salary of £5,000 a year dies on, say, 6th October, 1934. On the 1st
January, 1935, his estate has to find £231 5s. for the payment of Sur-tax for the year 1933–34. In addition, there will also have to be paid Sur-tax for the period 6th April to 6th October, 1934. Under the Section of the Finance Act of 1912, which I have quoted, if he had died on 6th October, 1928, before the alteration of the law of which I complain, his Super-tax liability would only have been for the proportion of the financial year 1927 during which he had lived, namely, £115 12s. I suggest to the Chancellor that he might carefully consider this case and see if some relief can be given.

3.44 p.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): The new Clause is not so simple as it may have sounded to those who listened to my hon. Friend's exposition of it. He seemed to be asking that a man should only pay Surtax on his income for a period of the year in which he lived. That is not what this proposed Clause means at all. Surtax is paid for the year previous to the year for which Income Tax is paid. In the year in which a man pays his Income Tax for 1935 he is paying his Surtax for 1934. The effect of the new Clause would be that a man who dies in the middle of 1935 would be let off half his Surtax for the year 1934, which is a claim he has no right to make. I would remind the Committee that in the first year in which a man becomes liable for Surtax he pays no Surtax at all. He does not pay until the following year. If he became liable to Surtax in 1931 he does not pay it until 1932. The taxpayer, therefore, who is liable to Surtax and who dies in October, 1935, has no claim to be exempted for half the previous year's Surtax. His estate will not only have to pay the Surtax for the six months of the year previous to his death, but Surtax for the year before that, when he was enjoying his additional income.

3.46 p.m.

Mr. TINKER: I am glad to hear the Financial Secretary's speech, because after listening to the speech of the hon. Gentleman who moved the new Clause, I was under the impression that some injustice had been done to the estate of a deceased person. It appears, however, that all that is being asked from the estate is what the taxpayer would have been liable to pay had he lived. That is
only fair, and I am surprised that such a proposal should have been put forward.

Question, "That the Clause be read a Second time," put, and negatived.

New CLAUSE.—(Allowance in respect of voluntary contributions under Widows', Orphans' and Old Age Contributory Pensions Acts.)

Notwithstanding anything contained in the Income Tax Act, 1918, as amended by subsequent enactments, the same allowance of Income Tax shall be made in respect of voluntary contributions under the Widows', Orphans' and Old Age Contributory Pensions Acts as in the case of compulsory contributions under those Acts.—[Mr. D. G. Somerville.]

Brought up and read the First time.

3.47 p.m.

Mr. D. G. SOMERVILLE: I beg to move, "That the Clause be read a Second time."
I am moving this new Clause because I have received a strong letter from one of my constituents, a man who has made compulsory contributions under these Acts ever since they have been in being. His salary has now been raised from £245 to £255. Therefore, he will drop out of benefit unless he keeps up the contributions voluntarily. He writes that it is hard that, having contributed all this time under these Acts, he should now, at an advanced year, because he has received an increase of £10 a year in his salary, lose the whole of the benefits which would have accrued had he remained a compulsory contributor. It would cost very little to the State to grant Income Tax allowances in respect of these contributions when they are made voluntarily, and I think that they should be granted in order to encourage this form of saving. It seems unreasonable that when a man no longer has to pay these contributions because he has a small increase of salary, or because he throws up a job and starts a small business, and still wants to keep up the payments voluntarily, he should be deprived of Income Tax relief in respect of them.

3.50 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): My hon. Friend put forward as the ground for asking for this concession that his constituent had contributed all his life compulsorily to the pension scheme, but that is no
grievance that he has lost the right to obtain an allowance under Income Tax because he is no longer contributing. So long as he was bound to contribute he had this allowance, and he has lost nothing in the past by what happens now. In view of the fact that his income has been increased he has ceased to be liable to contribute compulsorily, but it is open to him, if he likes, to become a voluntary contributor. The reason he got that allowance was not due to anything in the Pensions Act, but to the general provisions of the Income Tax Acts. Those general provisions give an allowance where a man is obliged compulsorily by statute to contribute towards the securing of a pension for himself or his dependants or by reason of the terms of the employment. In the case of a voluntary contributor neither of those conditions is fulfilled, and it would therefore be contrary to the general principle to admit an exception in that case.
Considered on its merits what is there to be said for this case? My hon. Friend said it was a very small matter. I wonder whether he realises how small it really is. The amount which is taken as being the equivalent of the contribution is £1 a year, and therefore the amount of allowance that the man would receive, if his taxable income were under £135, would be 1s. 6d. a year. Really one ought not to be asked to legislate for such a trifling relief as that. There are something like 500,000 voluntary contributors to-day and the number of them is increasing at the rate of 30,000 or 40,000 a year, and when my hon. Friend considers the extra amount of labour there would be in dealing with all those cases for the sake of 1s. 6d. a year, I hardly think he will feel that it is worth while to press his new Clause.

3.53 p.m.

Mr. RHYS DAVIES: I do not think the Chancellor of the Exchequer has really done justice to the hon. Member's new Clause. It is true that there are half a million voluntary contributors under the national health insurance and contributory pensions scheme, but many of them will be in receipt of very much less than £250 a year; a considerable number will have become voluntary contributors because of unemployment, though they will be removed from that category by the passing of the present Health Insurance Bill now before Parliament.
The voluntary contributor, indeed, is becoming subject to many disadvantages consequent upon his small increased income as soon as he goes beyond the limit of the rate of £250 per annum. If his income rises to £252 per annum and he becomes a voluntary contributor the position is not quite so simple as the Chancellor put it. When a man is receiving up to £250 per annum as wages or salary the employer pays, roughly, one-half of the contribution, because he is compulsorily insured, but once his income goes beyond £250 he has to pay both the employer's contribution as well as his own, and more than that, he loses the free medical attention that was formerly provided for him. I have pointed out previously that this type of person is, in equity, dealt with unfairly by the present law. I have always understood that the Treasury could, for the purposes of taxation, over-ride all other legal enactments that are passed by Parliament. I have never heard it argued that because a certain Act of Parliament had been passed the Treasury could not include in a Finance Bill anything that would violate its provisions.

Mr. CHAMBERLAIN indicated dissent.

Mr. DAVIES: I thought that was the interpretation to be placed on the right hon. Gentleman's speech, but whether I was right in assuming that or not I do hope that some day the Treasury will again look into this matter. Although it may appear a very small point, I am very much afraid that Members of Parliament are getting into the habit of thinking that 2s. 6d. or 10s. 6d. or £1 is nothing to some of these poor people. Even 3d. a week is a lot to some men in my own constituency, and other divisions as well. I have spoken on behalf of these people under another Measure before Parliament, and I do not think the statement of the right hon. Gentleman will be the last word said in connection with the position of voluntary contributors.

3.56 p.m.

Mr. AMERY: This may, as the Chancellor has pointed out, be a very small matter so far as the amount of money concerned, but it does raise a rather important issue of principle, and that is the position in which all our social legislation leaves the small man who is his own employer, the small independent worker.
For many years past all our legislation has tended to provide for the employé. Everything is done for the employé, and the small man working on his own who, from the national point of view, is as desirable as the employé, comes off much worse. This is only another instance, a very small one, it may be, of the general differentiation against the small independent worker. I only got up to emphasise that point—not to press the Chancellor so much on this particular Clause as to ask him to keep the position of the small self-employed worker in mind in his future legislation.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Provision, to allow deductions in respect of inherently wasting assets.)

For the purpose of enabling deductions from revenue receipts of expired capital outlay on inherently wasting assets to be allowed by the additional commissioners' claims in respect of those deductions shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits and gains of any trade, manufacture, adventure, or concern, and where such a deduction from the revenue receipts is made, and has been made, from the commencement of the actual employment of the inherently wasting assets in seeking profits or during a period of not less than three years to the end of the usual financial year of the particular trade, manufacture, adventure, or concern, last prior to the year of assessment, and provided such deduction is so made as to prevent the same being available as profits, the additional commissioners in assessing those profits and gains shall make such allowances in respect of those claims as they think just and reasonable.

For the purpose of this Section the term "inherently wasting assets" means assets which necessarily waste in the process of seeking profits, provided always that such wasting assets are not the value of transferred rights to future profits or increase which would have been chargeable; with income tax if no transfer of such rights had been made.—[Sir B. Peto.]

Brought up, and read the First time.

3.58 p.m.

Sir BASIL PETO: I beg to move. "That the Clause be read a Second time."
If this new Clause appears to be somewhat long and somewhat complex it only shares what is common to all Clauses dealing with this very difficult question of Income Tax. Perhaps it would be convenient if I analysed the Clause so as
to show of what it is composed. It is divisible into five parts. The first is contained in the first two lines, which show that the purpose of the Clause is to enable deductions to be made from revenue in respect of expired capital outlay on inherently wasting assets. The Clause proceeds in the fifth line to lay down two conditions which must be fulfilled if the claim is to be substantiated. The words are:
Where such a deduction from the revenue receipts is made, and has been made, from the commencement of the actual employment of the inherently wasting assets in seeking profits or during a period of not less than three years to the end of the usual financial year.
That merely means that it must have been the customary practice in the business to make these deductions from the commencement of the employment of the actual assets in question or during at any rate a period of three years up to the end of the last financial year. The third part of the Clause comes in line 10.
Provided such deduction is so made as to prevent the same being available as profits.
The effect of that is that it must not be placed to an ordinary reserve fund used for various purposes such as the equalisation of dividends or anything of that kind, but must be definitely earmarked for the purpose of reducing the capital value of inherently wasting assets. The last portion of the Clause is in the proviso which deals with the definition on line 14:
Provided always that such wasting assets are not the value of transferred rights to future profits or increase which would have been chargeable with income tax if no transfer of such rights had been made.
Those words rule out all such things as the value of leaseholds, goodwill, patent rights, copyrights, and so forth. Those are all assets which can be, and are, bought and sold in the open market, subject to the payment of Income Tax. It was the inclusion of all these assets that was the shipwreck of the wasting asset Clauses which for many years had been moved in this House. This actual Clause was first moved in 1912 by Lord Hanworth, now Master of the Rolls, then Member for Warwick and Leamington. It was moved by me a couple of years later, and has been before the House on several other occasions. While the
Clause does not include the things which I have already enumerated that ought not to be rightly included; on the other hand it includes a very wide field of wasting assets, not only plant and machinery, which are dealt with in another Clause, which you, Captain Bourne, have not selected, but it deals with all minerals such as oil, nitrate, coal and gold, and so on, subject to the conditions I have already mentioned, namely,
where such a deduction from the revenue receipts is made and has been made from the commencement of the actual employment of the inherently wasting assets in seeking profits or during a period of not less than three years to the end of the usual financial year
Of course, besides the minerals, it includes all classes of plant and machinery subject to the conditions that I have enumerated. Had this Clause been accepted—and it was largely approved in principle by the Chancellor of the Exchequer of 23 years ago—there would have been much less need for Clause 24 of the present Finance Bill, because there would have been so much less machinery and plant required to be scrapped. I venture to do something which I do not think I have ever done before in this House, and that is to quote in order to show the Committee how we debated the subject all those years ago. On 2nd August, 1912, I said:
The thing we have to recollect in this country is that the size of the scrap heap is a very good measure of progressive business management in any industrial affair."—[OFFICIAL REPORT, 2nd August, 1912; co). 2619, Vol. 41.]
I believe that is absolutely true. Had the Clause I am now moving been accepted on that occasion, or subsequently, it would have been an extremely good thing both for the progressive development of industry in this country and of employment, because inadequate allowance for wastage and obsolescence of plant and machinery has been a constant hindrance to the development and employment of efficient and up-to-date machinery. If that were the case in 1912, when Income Tax was 1s. 2d. in the pound, I would like hon. Members to consider what it means in the post-war period when Income Tax has varied from 4s. 6d. to 6s. It becomes of enormous importance that the tax should be so adjusted as to be payable on what are profits, and not become a burden and
prevent progressive development in business by trying to collect and successfully collecting it on very large annual sums which are never, and never can be, divisible as profits. In the case of minerals, this method of collecting tax on wasting assets such as nitrate fields, oil wells and things of that kind has driven numerous companies who would otherwise register here, to register abroad, which has meant the loss of Stamp Duty to the Treasury and of employment for clerks and of orders for supplies of all kinds of things necessary for the development of these minerals.
There is another reason why this Clause becomes far more urgent now than it was in the earlier days when it was moved. It is not only because Income Tax has risen almost four times as high as it was then, but the life of the machine in the average industry is far shorter than it was 25 years ago, and still more than it was 50 years ago. If our industries are to be ahead of their competitors abroad, it is necessary for them to be constantly changing plant and machinery. If that be so, this Committee should do everything possible to encourage the people in control of our industries to seek to get machinery and plant better and more up-to-date than the machinery and plant in any competitive country in the world. A very great authority on Income Tax in the past, Mr. Leake, in a classic work on the subject, wrote:
No annual profit arises until the inevitable annual wastage in the assets in which the capital was originally invested has been fully provided for out of gross receipts.
I have quoted that before in the House, and I would like to remind the Chancellor of the Exchequer who, I think, has not been in that office at any time when this Clause has been moved before, that a predecessor in the office, the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said, in reply to the Debate, on 2nd August, 1912:
It is one of those problems which have embarrassed and perplexed every Chancellor of the Exchequer, because, on the face of it, there is a case to be met. In fact, I go beyond that and say that there is a real case that has got to be dealt with."—[OFFICIAL REPORT, 2nd August, 1912; col. 2622, Vol. 41.]
The case has never been dealt with since, and I would urge that this is the appropriate time to deal with it, because if
the Committee will look at Clause 24 of the present Bill they will see that the principle of a complete deduction in the case of contributions to a scheme for the removal of redundant machinery in any industry is
allowed to be deducted as an expense in computing the profits or gains of the said trade.
Those words are in Sub-section (1), and in Sub-section (2, a) the Committee will see that the Board of Trade must certify a scheme if they are satisfied
that the primary object of the scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom.
I am bound to say to the Chancellor of the Exchequer that if he is willing—if I may use a homely phrase—to lock the stable door after the horse has been stolen, would it not be better, and will he not take steps, to lock it now, so as to prevent further theft of British industry and employment? I would ask him and the Committee to consider the very appropriate words used by the Financial Secretary on 19th June, when speaking on Clause 24:
In this instance, we have thought it wise to assist the tendency in industry to help itself and to get itself into better form to compete with its competitors all over the world as by introducing new machinery which will assist the whole industry, workers as much as the employers."—[OFFICIAL REPORT, 19th June, 1935; col. 485, Vol. 303.]
I venture to say that the argument could not be put more concisely and cogently for the Clause I am moving. If it be right to do that in the case of machinery that has already become redundant or obsolete, in the interests of employment and industry as a whole, it certainly must be true of industry as a whole that you can do nothing better, as the Financial Secretary put it:
to assist the tendency in industry to help itself and get itself into better form to compete with its competitors.
That is all that I want the Chancellor of the Exchequer to do. I want to say one word as to the argument, if you can call it an argument, which has always been put up before us hitherto. No Chancellor has ever used the argument that it would not be good for industry, but we have always been told that it would cost so much money. In 1912, we were told—it was a very rough estimate, I believe—
that allowing for coal mines in this country and for mining abroad, it would cost as much as £2,000,000 when the Income Tax rate was 1s. 2d. At the present time, allowing for the extra allowances made in the 1932 Finance Act for deductions for obsolescent machinery, the cost might be perhaps £7,000,000. The Chancellor of the Exchequer may tell me that he could not have such a cut in his estimate of revenue receipts in the present year, but I would most respectfully put to him that surely this should be the very first subject with which he should deal in any contemplated reduction of the Income Tax. The best thing he could do to ensure improvement in the industry of this country would be to cease as soon as possible collecting, in a manner which hinders enterprise and development, a tax on what is not part of the profits of industry.

4.16 p.m.

Mr. CHAMBERLAIN: My hon. Friend has shown to the Committee that the subject of his proposed new Clause has been debated in this House for a good number of years, and he has quoted from debates which took place on the subject over 20 years ago. Hon. Members must have reflected that if, in all those years, so powerful a case has not moved the House of Commons to make the alteration, there must be something more in it than would appear from the considerations which the hon. Member has put before us. Indeed, this is one of the most difficult and complicated questions with which any Chancellor of the Exchequer could try to deal. It bristles with difficulties and is full of pitfalls.
In connecting the proposed new Clause with Clause 24 of the Finance Bill, my hon. Friend was confusing very different sets of conditions. His argument was that the purpose of the Clause was to encourage manufacturers to replace obsolete machinery by something more up to date and better calculated to enable them to compete with their foreign competitors, but the case dealt with in Clause 24 of the Bill is a different one. There is no question there of replacing obsolete machinery by that which is more up to date. There you have a state of affairs in which, owing to changes in trade and the falling off of the business which can be done by the Lancashire cotton industry, there is in existence a very large excess of machinery, more
machinery than can possibly be used. By the fact that the machinery is spread over a large number of competing factories, you arrive at the position that no factory has sufficient work to enable it to meet its overhead charges and make profits. The plan there is to reduce the total amount of machinery used in the trade so that work may be concentrated and overhead charges brought down to a more reasonable figure.
With regard to the general question of the allowances to be made for obsolete or obsolescent machinery, great alterations and improvements, from the point of view of the manufacturer, have been made in the last 20 years and since the date when the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) made the observations which my hon. Friend quoted. A good deal has been done for the manufacturer by way of increased allowances for obsolete or obsolescent machinery, and to-day the manufacturer is allowed not only to deduct a very substantial amount by way of depreciation for wear and tear year by year, but if, in any year, he replaces an obsolete machine by a new and more up-to-date machine, he may write off entirely from the profits of the year the value of the machine which has been scrapped. It is, therefore, difficult to see how you can do very much more than that to encourage the manufacturer to replace his obsolete machinery by something newer.
The Committee will perceive that the proposed new Clause which my hon. Friend has moved goes a great deal further than merely the question of machinery and plant, and deals with inherently wasting assets. That would apply to a coal mine which is, of course, an inherently wasting asset. My hon. Friend has endeavoured to make certain that in such cases the proprietor of the mine should make a deduction from his profits, by way of sinking fund, to meet the wasting character of his capital, which is the coal in the mine, and he has inserted words which are intended to provide that such a deduction must be made, and that such deduction shall not be available as profits. I appreciate my hon. Friend's intention in putting in those words, but I am bound to say from the point of view of the Inland Revenue that I find it very difficult to believe that any effective check could be placed
upon such a deduction, to make sure that the deduction was not subsequently made available in some form as profits.
I would remind the Committee that the whole subject was exhaustively investigated in 1920 by the Royal Commission on the Income Tax which was presided over by Lord Colwyn, and that that Royal Commission made a number of recommendations upon the subject, one or two of which are very relevant to the consideration of this Clause. The Commission found it impossible to make any general recommendation that, from the income produced by any asset, allowance should be made for amortisation of its capital value, because once you admitted the principle it might be carried a great deal further than at first sight would seem possible. The first instance of a wasting asset that would occur to anyone is a mine—not necessarily a coal mine—where the source of profits is the mineral to be mined and where there is only a limited stock of mineral which, in process of time, will be exhausted. You might also take the case of the professional man, say the surgeon, whose skill and value lie in his fingers. Everybody knows that the years in which a surgeon is at his best, and can use with the greatest advantage the skill which he possesses, are strictly limited. His capital lies in his own body, which is an inherently wasting asset. One might say the same thing about a barrister or any other kind of professional man.
What the Royal Commission said, in effect, was that they did not believe that people, in considering what was their spendable income, made a careful actuarial calculation in order to make certain that they were not spending some portion of it, and that where there was a reasonable length of life of capital, people ignored it altogether and considered that the whole of the income was spendable. The Royal Commission therefore said that although they could make no general recommendation that allowance should be made for amortisation of capital value, in certain cases an allowance should be made. They recommended that when the life of a wasting asset was estimated at 35 years or more, no allowance should be made. In other words, the allowance should be confined
to cases where the life of the asset was under 35 years.
I would quote two other recommendations. The first was that no allowance should be granted to incomes arising from wasting assets which consisted of the proprietorship of natural resources in this country. Ownership of minerals and oil is ownership of natural resources. They made a recommendation also that the allowance for depreciation of mills and factories and other similar premises should not take the form of a percentage of the annual value. The result of that would be to withdraw the special allowances made in 1918, and as in many cases those premises will last more than 35 years, they could not get the benefit of the allowance under the recommendation to which I previously referred. It is not surprising in this situation that the recommendations of the Royal Commission, although made as long ago as 1920, have never been given legal effect. The representatives of industry and commerce in this country, such as the Associated Chambers of Commerce, have never come forward with any expression of desire to see the recommendations carried into effect. They recognise that, though there are some things in the recommendations which they would like to see done, there are other things which they would not like at all and it is impossible to pick out the plums and say that those alone shall be accepted, because the withdrawal of the special allowances would go a good way to compensate for the heavy cost which, my hon. Friend recognises, the adoption of his proposal would mean to the Treasury. In recent years they have confined themselves, not to asking for anything like this, but to discussing more limited questions of allowances for wear and tear and obsolescence of machinery and plant.
I hope that I have said enough to show the Committee that it is a very difficult subject, and one which has engaged the attention not only of my hon. Friend and his Friends but also of a Royal Commission, which went into every aspect of the case and made recommendations which are in many respects at variance with the proposed new Clause of my hon. Friend and that nevertheless the recommendations have not yet found any general acceptance among the representatives of trade and industry.

4.29 p.m.

Sir WILLIAM WAYLAND: I suggest that the Chancellor of the Exchequer should give power to the surveyors of taxes in regard to depreciation of machinery. In the case of some machinery, especially that used in the chemical industries and which does not last half or one-sixth of the time that ordinary machinery lasts, owing to the corrosive chemicals which are manufactured in vessels made of iron or copper, the surveyor might be given power to deal with special cases and a great many of the complaints could, in that way, be met.

Mr. CHAMBERLAIN: The case which the hon. Member brings forward is obviously one of wear and tear and not of obsolescence. If there are special circumstances which he would like to bring to my attention, I shall be happy to go into them, if he will communicate with me.

Sir W. WAYLAND: I thank the right hon. Gentleman.

Sir B. PETO: In view of the very full explanation which has been given by the Chancellor of the Exchequer, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Reduction of vehicle licence duty on commercial goods vehicles.)

As from the first day of January, one thousand nine hundred and thirty-six, Section thirteen of the Finance Act, 1920 (which imposes duties of excise in respect of mechanically propelled vehicles), shall have effect as if the rates of duty mentioned in sub-paragraph (e) (ii) of paragraph 4 and sub-paragraphs (c) (ii) and (c) (iii) of paragraph 5 of the Seventh Schedule to the Finance Act, 1933, were reduced by one-quarter.—[Mr. Parkinson.]

Brought up, and read the First time.

4.30 p.m.

Mr. PARKINSON: I beg to move, "That the Clause be read a Second time."
This proposed new Clause deals with a burden which rests very heavily upon the transport industry of this country at the present time. The present taxation on road transport is really an indirect tax on the industry of the country, from which every pound paid in taxation on road
transport has to be collected eventually. Every mile that goods are carried represents a certain amount of taxation, only a small proportion of which is applied to the general maintenance of the roads of the country. Moreover, local taxpayers complain bitterly of the large sums which they have to pay for road maintenance, but they do not realise that their own transport is paying more than its fair share of the cost of the roads, and that, of the money collected from them in that way, the Chancellor of the Exchequer takes for general revenue purposes more than is expended on road maintenance. I think it may be said that the Chancellor of the Exchequer takes something like 75 per cent., and that only 25 per cent. goes to the maintenance of the roads of the country.
There has been a large growth in the yield from vehicle duties and other forms of taxation on road transport. In 1925, the total yield of the vehicle duties was something like £4,750,000. In 1932, the Salter Conference, which examined these forms of taxation, certainly recommended increases, and those increases were applied, but they also laid down a kind of basis for the amount of taxation which should be paid by these people. In 1933, in accordance with the recommendations of the Salter Conference, increased vehicle duties were imposed, particularly on heavy vehicles, and a duty of 1d. per gallon was put on heavy oil; and in view of the increase that has been made in the duty on heavy oils, we consider that there should be a reduction in the licence duties on heavy commercial vehicles corresponding with the 25 per cent. reduction that was made in the horse-power tax on private cars last year. The increased vehicle duties yielded in 1934 nearly £11,000,000, and the petrol tax on goods transport yielded over £14,000,000. While I agree that some of this money must be taken for general revenue purposes, I do not think that any particular industry ought to be overtaxed in order to bring it into line with a greater transport industry. I cannot get away from the belief that the taxation of the road transport of this country bears a certain relation to the question of the railway companies.
After the Salter Conference, I thought we had arrived at a basis of allocation which would be fair and proper to everyone. The Salter Conference in 1932 based
their calculations on a road expenditure of £60,000,000, but the expenditure on the roads has fallen to something like £52,750,000. The Salter Conference considered that a proper share for commercial vehicles to pay, having regard to their estimated figure of £60,000,000, would have been £23,500,000, but that amount has been very considerably exceeded, for we find that road transport is now paying £25,000,000 annually in taxation. This is out of proportion to what the Salter Conference suggested, and I think it ought to be carefully examined by the Chancellor of the Exchequer. I do not want to attribute to him any unfairness in regard to the imposition of this taxation, because I do not think that individually it matters very much to him, but, if we intend this line of industrial development to proceed at an even pace, we must treat it in an even way, in order that the proportion between the service rendered and the payment in cash may be fair. The taxation paid by road transport is £1,500,000 more than the amount recommended by the Salter Conference as its fair contribution to road expenditure, while, on the other hand, the actual expenditure on the roads has fallen by over £7,000,000.
We are all aware of the fact that the number of vehicles on the roads has increased. The number of vehicles on the roads in 1925 was 234,000, whereas now it is 413,000, or an increase of 70 per cent.; but the taxation paid by the road transport people has increased during that period by nearly 400 per cent., so that road transport is now paying five times as much in taxation as it paid 10 years ago. I think the Committee will agree that the industry ought not to be overburdened in this way, on account of the retarding effect that it must have on the extension of the business. I understand, from what I have read in the Press, that the road transport operators were eager to take advantage of the lower taxation and lower running cost of Diesel engines in order to reduce their operating expenses, and the local authorities also are affected. Many road transport operators, including local authorities, have changed over in this way in order to be able, by reducing their working expenses, to develop the business in which they are engaged. This has involved them in a considerable expenditure
of money, which they have looked upon as a kind of deferred payment, hoping to get it back through cheaper running costs and taxation in the case of heavy oil fuel, but things have not worked out in that way. Many corporations are now losing money, and are likely during the coming year to lose to the extent of thousands of pounds. Only this morning I 'was told that the loss to my own corporation during the present year would be something in the neighbourhood of £4,000 as compared with the former basis of taxation.
In 1925 the total amount of vehicle duties and fuel tax was £4,750,000 in round figures, but in 1932 it was £21,500,000, and in 1934 it was £25,000,000. I do not think that any Member of the House believes that there ought to be an accumulation of balances in the Road Fund which can be taken out at any time that the Chancellor of the Exchequer thinks fit, leaving the development of roads, bridges and so on to be dealt with in a haphazard manner. The object of the proposed new Clause is to do something on the lines of what was done for private cars last year. At the present time, in the case of the heavy commercial vehicle, the duty on its fuel is being increased from 1d. to 8d. per gallon, and it is only fair that it should receive some concession of this kind. I understand that such a concession would cost something like £2,750,000 a year, but, in view of the large increases which have been made in taxation in other directions, I do not think that this would be a very heavy burden to place on the Exchequer for the benefit of people who are earning their living and serving their country commercially and industrially by the use of heavy commercial vehicles.
We must all agree that road transport is an important and expanding business, and it is a business which has gone ahead even in the darkest years since 1929 or 1931. It has been extending, improving, adopting new methods and new machinery, and doing all that was possible to increase the transport services of the country; and it does not seem fair that it should be more heavily burdened than is necessary. We ought not to put burdens upon people in any industry who are doing their best; they ought rather to be encouraged; but I am afraid that in this case they are not receiving the encouragement which they ought to re-
ceive to operate more cheaply in meeting the commercial and industrial requirements of the nation, and to be available when we succeed in bringing up to the full 100 per cent. the 80 per cent. of prosperity which in his Budget Speech the Chancellor said we had already recovered. These people are now overtaxed, and to relieve their burden would help the industry to go forward in more ways than one and attain greater efficiency in meeting our greater commercial and industrial needs.
This industry ought not to be considered too much in relation to the railway system of the country. The 25 per cent. reduction in licence duties proposed in the Clause would to some extent counterbalance the heavy increase which has been made in the taxation on heavy oils, which impose upon the industry a very heavy charge indeed. I appeal to the Chancellor to give full consideration to this matter, because I am sure that, in common with every Member of the House, he wants to see the greatest possible efficiency attained in every industry. There is no industry more expanding and enterprising than the road transport industry. It has its faults and weaknesses like every other industry, but it is growing continually, and we ought to encourage it and give it a full opportunity of serving the needs of the commercial, industrial and national requirements of our country.

4.46 p.m.

Sir PERCY HARRIS: My experience of many years of Chancellors of the Exchequer is that they do not easily yield to pleas for reductions of taxation. They have a habit of boxing up things very tightly. We have the usual and inevitable argument as to how much the sympathy of the Chancellor of the Exchequer is with the case of the taxpayer, but that he has to do his best to consider the needs of the revenue. It is about time that Members of Parliament kept a watchful eye on the constant demand of Chancellor of the Exchequer after Chancellor of the Exchequer to tap this very convenient source of revenue. The fact that this is an expanding industry, and, up to the present, has been healthy and strong and able to stand all those in-roads, is a very strong reason for the Chancellor of the Exchequer to go on in his wicked way. Perhaps next year he
will make a suggestion for a further tapping of this convenient source. Fundamentally it is a bad tax. It is bad in principle, because it is generally against the well-being of industry. It is often said that we are a nation of shopkeepers; it is more correct to say that we are dependent upon our industry for our very existence. Road transport, in these modern times, is an essential part of the cost of production, and it is particularly so of those industries which are feeling the full blast of the world depression—the heavy industries. The progress that is being made in Belgium in competition with the great essential industries of this country, iron, steel, machinery, shipbuilding and so on, is very remarkable. The right hon. Gentleman, of course, has at least powers under the tariff to give these industries protection, and no doubt he feels that he has done all that they are entitled to expect. The fact that these industries have been able to stand on their own legs, so to speak, in face of the full blast of world competition is because they have the advantage of cheap production. I was making inquiries the other day as to the reason why a small country like Belgium, with a very small home market and very small Dominions to exploit, has been so serious a competitor.

The DEPUTY-CHAIRMAN: The hon. Baronet is getting rather wide of the Clause, which deals with a reduction of taxation on certain vehicles only.

Sir P. HARRIS: I had practically finished what I wished to say in that connection. I was going to say that I was informed by experts that one of the primary advantages they had in competition had been cheap transport. During the last few years there has been this wonderful expansion in the heavy lorry which has enabled the producer to bring goods from the place of production to the market cheaply, efficiently, without manhandling and without any shifting from one vehicle to another, which is to the inevitable disadvantage of the railway as opposed to the commercial road vehicle. That advantage has been a very real one, and yet the Government come along year after year first with this, and then with that tax. This year we have been trying to discourage the expansion of the Diesel oil engine by putting an extra tax upon heavy oils. The right hon. Gentleman
put up a very plausible plea in defence of the heavy oil tax that all that he was doing was to equalise and put on to the same plane the Diesel engine and the internal combustion engine. That was a very plausible defence.
The Clause of the hon. Member for Wigan (Mr. Parkinson) gets over that argument by proposing to give the same advantage to the two forms of engines. The case that may be put up is that this industry is so strong and efficient, and every year is so much improved that it can well stand any taxation. But there comes a line very near to breaking point, and I know from my own knowledge of this industry, which is largely centred in London, and particularly in East London and in my constituency, that it is feeling the draught. The severe internal position may have something to do with it, but every year the steadily increasing cost is making the use of the commercial vehicle in competition with railways more difficult, and there may come a time when this industry may cease to expand. It has expanded in spite of taxation because of the ingenuity of the inventor and the natural progress of mass production of engines, and the making of them more efficient. It has been impossible to stifle this industry with any amount of taxation up to the present, but now in 1935 the industry is getting on in years and the running costs are becoming very heavy and many companies are finding it very difficult to make ends meet or to meet the running costs. The right hon. Gentleman will have to consider sooner or later whether he has not come to the end of the amount of taxation he is entitled to put upon the industry.
It is not much good speaking, because I observe the right hon. Gentleman is engaged in a very interesting conversation, and I should not like to disturb him. No doubt it is something of great importance. Still I think that we are entitled to some courtesy. It is no use speaking or putting points if the right hon. Gentleman is not taking the slightest notice and engages in conversation all the time. If he cannot take notice, perhaps it would be better if we could have someone else present so that we might have the courtesy of some attention.

Mr. CHAMBERLAIN: The hon. Gentleman is always very sensitive about these
matters. This is a matter which primarily concerns the Minister of Transport—

Sir P. HARRIS: He is not here.

Mr. CHAMBERLAIN: A representative of the Minister of Transport is here in order to answer the points which the hon. Member is making, and as he is to answer the Debate he is listening.

Sir P. HARRIS: I am very much obliged to the right hon. Gentleman for his explanation. Knowing him, I did not think that he intended any discourtesy. I am trying to put up a case for an industry of great importance to my constituency, and I really wish that some attention should be given to it. I am quite satisfied. I was saying that the industry is now beginning to feel the draught of this very heavy taxation. There is a great deal of depression and unemployment among men engaged in the transport industry. If the files of the Employment Exchanges in London could be searched, it would be found that a very large percentage of the men out of work were registered as being carmen or engaged in the transport industry. The limit of taxation has been reached, and it is time that the Committee cried a halt to this steady and persistent attack on an important new industry which is essential for the prosperity of the country.

4.55 p.m.

Sir W. WAYLAND: I think that the hon. Member for South-West Bethnal Green (Sir P. Harris) has very much overstated the value of the commercial vehicle, especially the one of heavy tonnage. The value of the railway compared with the modern commercial vehicle frequently seems to be forgotten in this House and elsewhere. Surely our roads would be safer, we should be doing better work, and studying the interests of the country far more and to better purpose if we taxed the heavy commercial vehicle out of existence, and especially the trailer. We should not only serve the railways, which are absolutely vital to the prosperity of the country, but we should also save money, and many lives and limbs. Anyone using the roads knows perfectly well what that big four, five or six-ton commercial vehicle, with a trailer, means to the man who is riding in a car or any other
vehicle, and to the pedestrian crossing the road. We have certainly developed the commercial vehicle during the past few years at the expense of our railways. I am neither a shareholder in the railways nor in any commercial vehicle undertaking, but, as one interested in the commercial prosperity of the railways, which, after all, represent nine-tenths of the carrying-power of this country, which have a considerable amount of unemployment, and have been suffering not only in not being able to pay interest to their investors, but also in not being able to carry out necessary reorganisations, due mainly to the competition of the heavy commercial vehicle on the road, I sincerely hope that the Chancellor of the Exchequer will not give way on this point, but will indicate to the Committee that he has in mind the further taxation of every commercial vehicle over two tons.

4.58 p.m.

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Captain Austin Hudson): As this matter is primarily one for the Ministry of Transport, I am replying to the Clause. It rather looked from the speeches of the two hon. Members that we might be going to have a repetition of the arguments which were used when the Road and Rail Traffic Bill was before the House. The hon. Member for South-West Bethnal Green (Sir P. Harris) will no doubt know that the present taxation was fixed in the Budget of that year on the recommendations made when that Bill was going through. The Clause, as it is drafted, would deal with tractors, steam and gas goods vehicles, petrol driven goods vehicles, and now, if the present Finance Bill is passed, with Diesel oil goods vehicles as well.
I do not think that the hon. Member for Wigan (Mr. Parkinson) was quite fair when he said that the Chancellor of the Exchequer had put an additional tax upon these heavy oil goods vehicles without doing anything in return. It is true that it is a small amount, but in Clause 3, Sub-section (2) they get the benefit of the reduced licence duty, and, therefore, will come under the proposed new Clause. We reckon that with the present number of goods vehicles, the tax produced will be some £11,500,000, and in a full year, if this Clause were
accepted, we should lose a sum to the Road Fund of no less than £3,000,000 or a little under, and for the current financial year the loss is estimated at some £2,000,000. The hon. Member for Wigan and his friends, and particularly the hon. Member for Plaistow (Mr. Thorne), are always especially solicitous about the Road Fund, and I am rather surprised that they should bring forward a Clause which would have the effect of causing a loss of £3,000,000 to that Fund. The hon. Baronet the Member for South-West Bethnal Green said that by the policy of the Chancellor of the Exchequer we were discouraging a great industry and people were going to be thrown out of work. I was rather surprised at that statement, and I had some figures got out for me and I find that the increase of these vehicles during the past year is no less than 12,000. I do not think he can say that our "discouragement" has done a great deal of harm to an industry which is expanding at such a rate. Furthermore, an Amendment very similar to this Clause, but of slightly wider application, was rejected last year.
I should like to deal with the argument of the hon. Member opposite that it is only fair that this Clause should be passed because of the concession given to private car manufacturers last year, when the horse-power tax was reduced by 25 per cent. I do not think the two things are at all comparable. These heavy goods vehicles are not taxed on horse-power but on unladen weight, and the concession given by the Chancellor to private cars last year was in order to help the manufacturers in the severe handicap that they had in turning out suitable machines for abroad and for our Colonies. It was for that purpose alone that the concession was given, and it does not apply to goods vehicles, which are taxed on a totally different basis.
The hon. Member also made great play of what the Salter Committee recommended. It is true that the amount of money which they visualised would be spent on the roads has not been reached. The reason for that is the financial stringency of 1931 and the time just after that. But surely the hon. Member is not going to advocate that these taxes should fluctuate according to the amount of money that is spent on the roads. That matter was considered by the Salter Com-
mittee who themselves made a recommendation that the duty should be stabilised for a period of five years. If we ever accepted the idea that we should allow fluctuation of the tax and we were to spend a much larger sum on road development in years to come, we should have to consider whether the licence duty should go up, and I can imagine nothing more disturbing to an industry than to, have a continually fluctuating basis of taxation.
The Salter Committee also said—and it is true now—that a disproportionate amount is being borne at present by private vehicles as against the goods vehicles for which the hon. Member pleads. At that conference there were laid down certain amounts which it was considered that goods vehicles should pay. In nearly every case the amount that they now pay is very much less than the amount recommended by the conference. For instance, for five to six-ton vehicles the conference recommended £108, and the present tax is £90, and so on right through. Therefore, both on the ground that the Chancellor cannot afford to lose the revenue which would be lost if this Clause were accepted and also on the merits of the case, I am afraid that we cannot accept it.

5.5 p.m

Dr. ADDISON: I am moved to rise in support of my hon. Friend because of the action of the Chancellor of the Exchequer in calling upon his hon. Friend to answer, and also because of something arising out of the argument that he has addressed to us. The right hon. 'Gentleman may hereafter be known as the persecutor of the motor trade. The hon. Gentleman behind me expressed his heartfelt desire with remarkable frankness that the Chancellor should tax the commercial vehicle out of existence in the interest of the railways. The right hon. Gentleman, of course, is far too subtle and far too experienced a politician to avow reasons of that kind, but, whatever may be his reasons, the effect of his action is certainly in that direction, and I think he ought to have answered for his own sins and not called upon his junior colleague to do so. The hon. Gentleman said how disastrous it would be for industry if it was subject to a fluctuating system of taxation and did
not know for years together what was going to happen to it. I am sure we all agree with him. It is an excellent argument, but, unfortunately, this Budget violates it. In this self-same Bill the taxes on heavy oils are increased many times. I should imagine that those who conduct this industry, those who have been struggling for some years past with remarkable ingenuity and persistence to perfect the Diesel oil engine, were aghast at the announcement—

The DEPUTY-CHAIRMAN: The Committee has already decided that point, and we cannot now discuss it.

Dr. ADDISON: I was not discussing the merits of it, but its relation to the argument addressed to us. The argument was how necessary it was that there should be continuity of method in taxation, and that the motor trade should know what was going to happen to it for a long period of years. I am only suggesting that that argument, however good it is in itself, is certainly not appropriate to this Bill, because the Bill violates it. I think there is a very strong case for the Chancellor of the Exchequer making a concession to this class of vehicle similar to that which he made last year to another class of vehicle. I did not follow the hon. Gentleman's ingenious argument, but he invented some distinction between a vehicle that uses petrol for the purpose of carrying goods and one that uses petrol for the purpose of carrying people, even perhaps joy riders. If there be any distinction at all, it is surely in favour of the commercial vehicle. It is at least carrying goods. It is rendering an industrial service to the country. The Chancellor of the Exchequer has done more than enough to heap burdens upon the industry, and I appeal to him to relent a little bit and to give it some concession in this direction.

5.9 p.m.

Mr. LOVAT-FRASER: I should like to appeal to the Chancellor of the Exchequer not to assent to what he is being asked to do by the Opposition. To talk about the heavy weight on the transport industry is rubbish. I do not wish to be offensive, but I was particularly struck by the total absence of any kind of facts in the wild statements of the hon. Baronet the Member for South-West
Bethnal Green (Sir P. Harris) as to the heavy weight pressing upon the industry as the result of taxation. If I were Chancellor of the Exchequer, I should be tempted to put even more taxation than now rests upon it. If he takes the trouble to look at the dividends paid by some of these cruelly crushed transport concerns, he will get a very real surprise. I am sure he will not listen to the appeals which have been made to him.

5.11 p.m.

Major Sir ARCHIBALD SINCLAIR: I am very much surprised at the hon. Member who has just spoken. Apparently he considers that the Chancellor of the Exchequer should inspect the Income Tax returns of a large number of industries, look up those that are doing well and put a particularly high tax on them. This is, no doubt, a contribution to 20th century economics, but I cannot help thinking that it is not altogether a sound fiscal principle. I share the surprise of my right hon. Friend at the Chancellor not replying to the case that has been put forward, but assigning to the Parliamentary Secretary to the Ministry of Transport the task of defending the proposal to maintain the taxation on the transport industry. Surely the function of the Ministry of Transport should be to encourage road transport, to encourage the employment that it gives, and to encourage the great service that it renders to agriculture and to industry, especially these heavy vehicles. The heavy floats that carry animals to the sale ring and to shows have been of enormous value to farmers in Scotland, and no doubt in England, too. It is a, most unfortunate thing that the Chancellor cannot see his way to yield to the very reasonable suggestion that has been made.
The Parliamentary Secretary did not go the whole way, but he went some way with the hon. Member who spoke last. He said there has been an increase of 12,000 of these vehicles this year. See how well they are doing on the taxes that the Chancellor is imposing. That, again, is obviously a perversion of an argument. If the taxes on this or any other industry were relieved, obviously it would receive favourable impulse and encouragement. Surely hon. Members opposite will not argue that taxation is good for industry. Surely they are not going to abandon the plea which I have
often heard them urge, that the best way to encourage industry and to give a stimulus to employment is to take taxation off industry. That, surely, is the argument that we hear from them, and it is a sounder argument than that put forward by the Parliamentary Secretary.
The hon. and gallant Gentleman said it is very surprising that gentlemen above the Gangway, who are always in favour of having a good sum of money in the Road Fund for road improvements, should be advocating a proposal which would diminish the Amount in the fund. As a matter of fact, it would diminish it by less than the amount of the raid that the Chancellor is making on it this year. If the Parliamentary Secretary wishes to meet us in that Argument all that he has to do, and it would be a very simple matter, is to engage in conversation with the Chancellor of the Exchequer and persuade him not to pursue his present intention of raiding the Road Fund to the extent of £4,000,000 or £5,000,000. The only way in which we can really make headway with very necessary improvements is to do what we suggest. Certainly, the Parliamentary Secretary was right in saying of hon. Members above the Gangway and those who sit on these benches that we think that an immense amount of improvement ought to be effected in the road system of this country, and that it is not a matter of £2,000,000 or £3,000,000 for a year that is required, but that a very great effort should be made—

The DEPUTY-CHAIRMAN: I think the right hon. Baronet is getting away from the Amendment before the Committee.

Sir A. SINCLAIR: I was dealing with the Minister's argument. I have said enough to make my position perfectly clear, and I hope that I have said sufficient to persuade the Chancellor of the Exchequer to take a fresh view of the proposal now before the Committee.

5.16 p.m.

Mr. TINKER: I listened to the Parliamentary Secretary to the Ministry of Transport, and I wondered whether the arguments from this side had been considered at all. When we were told that the representative of the Ministry of Transport would reply I wondered whether it would be a mechanical reply
or a reply based on the arguments put forward. On Amendments of this kind we expect the Treasury Bench to pay some regard to our arguments. One does not like to think that the reply has been cut and dried by some Under-Secretary. We know that the reply has been put to the Parliamentary Secretary and he cannot move one iota from it. The Committee ought not to be treated in that way. The Opposition is entitled to some examination of the arguments put forward. If when an Amendment it put on the Order Paper a reply is given without reference to the argument, the whole case goes by the board. I think the Chancellor of the

Exchequer has been somewhat lacking in his duty and in courtesy to the Committee in not replying to the arguments. We are certainly entitled to something more than we have had to-day. The right hon. Gentleman has not thought fit to reply to what we have said. I hope that he will give an answer, even if he has to say that he has made up his mind to balance the Budget and that no change can take place. He ought to give some reply.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 43; Noes, 223.

Division No. 245.]
AYES.
[5.18 p.m.


Adams, D. M. (Poplar, South)
Evans, R. T. (Carmarthen)
Mander, Geoffrey le M.


Addison, Rt. Hon. Dr. Christopher
Gardner, Benjamin Walter
Mason, David M. (Edinburgh, E.)


Attlee, Rt. Hon. Clement R.
George, Major G. Lloyd (Pembroke)
Moreing, Adrian C.


Banfield, John William
Griffith, F. Kingsley (Middlesbrough, W.)
Parkinson, John Allen


Batey, Joseph
Harris, Sir Percy
Salter, Dr. Alfred


Brown, C. W. E. (Notts., Mansfield)
John, William
Shaw, Captain William T. (Fortar)


Cape, Thomas
Johnstone, Harcourt (S. Shields)
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)


Cleary, J. J.
Jones, Morgan (Caerphilly)
Thorne, William James


Cocks, Frederick Seymour
Lansbury, Rt. Hon. George
Tinker, John Joseph


Daggar, George
Lawson, John James
West, F. R.


Davies, David L. (Pontypridd)
Logan, David Gilbert
Williams, David (Swansea, East)


Davies, Rhys John (Westhoughton)
Macdonald, Gordon (Ince)
Williams, Dr. John H. (Lianelly)


Dobble, William
McEntee, Valentine L.
Wilmot, John


Edwards, Sir Charles
Macquisten, Frederick Alexander



Evans, David Owen (Cardigan)
Mallalieu, Edward Lancelot
TELLERS FOR THE AYES.—




Mr. D. Graham and Mr. Groves.


NOES.


Acland-Troyte, Lieut.-Colonel
Cazalet, Capt. V. A. (Chippenham)
Gledhill, Gilbert


Adams, Samuel Vyvyan T. (Leeds, W.)
Chamberlain, Rt. Hon. N.(Edgbaston)
Glossop, C. W. H.


Albery, Irving James
Chapman, Sir Samuel (Edinburgb, S.)
Gluckstein, Louis Haile


Allen, William (Stoke-on-Trent)
Chorlton, Alan Ernest Leofric
Goff, Sir Park


Amery, Rt. Hon. Leopold C. M. S.
Clarke, Frank
Goodman, Colonel Albert W.


Anstruther-Gray, W. J.
Cochrane, Commander Hon. A. D.
Gower, Sir Robert


Aske, Sir Robert William
Collins, Rt. Hon. Sir Godfrey
Graham, Sir F. Fergus (C'mb'rl'd, N.)


Assheton, Ralph
Colville, Lieut.-Colonel J.
Grattan-Doyle, Sir Nicholas


Astor, Maj. Hn. John J. (Kent, Dover)
Conant, R. J. E.
Grigg, Sir Edward


Bailey, Eric Alfred George
Cooke, Douglas
Grimston, R. V.


Baillie, Sir Adrian W. M.
Cooper, A. Duff
Guinness, Thomas L. E. B.


Baldwin, Rt. Hon. Stanley
Courthope, Colonel Sir George L.
Gunston, Captain D. W.


Baldwin-Webb, Colonel J.
Craddock, Sir Reginald Henry
Hales, Harold K.


Balfour, Capt. Harold (I. of Thanet)
Cranborne, Viscount
Hamilton, Sir George (Ilford)


Barrie, Sir Charles Coupar
Crooke, J. Smedley
Hanbury, Sir Cecil


Beauchamp, Sir Brograve Campbell
Crookshank, Col. C. de Windt (Bootle)
Hannon, Patrick Joseph Henry


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Crookshank, Capt. H. C. (Gainsb'ro)
Hartington, Marquess of


Beit, Sir Alfred L.
Cross, R. H.
Harvey, Major Sir Samuel (Totnes)


Benn, Sir Arthur Shirley
Crossley, A. C.
Haslam, Henry (Horncastle)


Bernays, Robert
Davidson, Rt. Hon. Sir John
Hellgers, Captain F. F. A.


Boulton, W. W.
Davison, Sir William Henry
Henderson, Sir Vivian L. (Chelmsford)


Bowater, Col. Sir T. Vanslttart
Denman, Hon. R. D.
Heneage, Lieut.-Colonel Arthur P.


Bowyer, Capt. Sir George E. W.
Denville, Alfred
Hills, Major Rt. Hon. John Waller


Braithwalte, J. G. (Hillsborough)
Dickie, John P.
Hope, Capt. Hon. A. O. J. (Aston)


Brass, Captain Sir William
Doran, Edward
Horsbrugh, Florence


Briscoe, Capt. Richard George
Drewe, Cedric
Howard, Tom Forrest


Broadbent, Colonel John
Dugdale, Captain Thomas Lionel
Hudson, Capt. A. U. M. (Hackney, N.)


Brocklebank, C. E. R.
Duggan, Hubert John
Hume, Sir George Hopwood


Brown, Brig.-Gen. H. C. (Berks., Newb'y)
Duncan, James A. L. (Kensington, N.)
Hunter-Weston, Lt.-Gen. Sir Aylmer


Buchan-Hepburn, P. G. T.
Ellis, Sir R. Geoffrey
Hurst, Sir Gerald B.


Burgin, Dr. Edward Leslie
Elmley, Viscount
Iveagh, Countess of


Burnett, John George
Emrys-Evans, P. V.
Jackson, Sir Henry (Wandsworth, C.)


Cadogan, Hon. Edward
Entwistle, Cyril Fullard
Joel, Dudley J. Barnato


Campbell, Sir Edward Taswell (Brmly)
Essenhlgh, Reginald Clare
Ker, J. Campbell


Campbell-Johnston, Malcolm
Evans, Capt. Arthur (Cardiff, S.)
Kerr, Hamilton W.


Caporn, Arthur Cecil
Fuller, Captain A. G.
Kirkpatrick, William M.


Castlereagh, Viscount
Galbraith, James Francis Wallace
Lambert, Rt. Hon. George


Cazalet, Thelma (Islington, E.)
Gibson, Charles Granville
Leckle, J. A.


Leech, Dr. J. W.
Orr Ewing, I. L.
Stanley, Rt. Hon. Oliver (W'morland)


Leighton, Major B. E. P.
Palmer, Francis Noel
Storey, Samuel


Lennox-Boyd, A. T.
Pearson, William G.
Stourton, Hon. John J.


Levy, Thomas
Penny, Sir George
Stuart, Hon. J. (Moray and Nairn)


Liddall, Walter S.
Percy, Lord Eustace
Stuart, Lord C. Crichton.


Lloyd, Geoffrey
Peto, Sir Basil E. (Devon, Barnstaple)
Sueter, Rear-Admiral Sir Murray F.


Lockwood, Capt. J. H. (Shipley)
Power, Sir John Cecil
Sugden, Sir Wilfrid Hart


Loder, Captain J. de Vere
Pownall, Sir Assheton
Summersby, Charles H.


Loftus, Pierce C.
Raikes, Henry V. A. M.
Thomas, Rt. Hon. J. H. (Derby)


Lovat-Fraser, James Alexander
Ramsay, Capt. A. H. M. (Midlothian)
Thorp, Linton Theodore


Lumley, Captain Lawrence R.
Ramsay, T. B. W. (Western Isles)
Titchfield, Major the Marquess of


MacAndrew, Lieut.-Col. Sir Charles
Rankin, Robert
Touche, Gordon Cosmo


MacAndrew, Major J. O. (Ayr)
Reed, Arthur C. (Exeter)
Tree, Ronald


MacDonald, Rt. Hon. J. R. (Seaham)
Reid, William Allan (Derby)
Tryon, Rt. Hon. George Clement


Macdonald, Sir Murdoch (Inverness)
Remer, John R.
Tufnell, Lieut.-Commander R. L.


Macdonald, Capt. P. D. (I. of W.)
Rickards, George William
Turton, Robert Hugh


McEwen, Captain J. H. F.
Ropner, Colonel L.
Wallace, Captain D. E. (Hornsey)


McKie, John Hamilton
Rosbotham, Sir Thomas
Wallace, Sir John (Dunfermline)


Macmillan, Maurice Harold
Ross Taylor, Walter (Woodbridge)
Ward, Lt.-Col. Sir A. L. (Hull)


Makins, Brigadier-General Ernest
Runciman, Rt. Hon. Walter
Ward, Irene Mary Bewick (Wallsend)


Manningham-Buller, Lt.-Col. Sir M.
Runge, Norah Cecil
Ward, Sarah Adelaide (Cannock)


Margesson, Capt. Rt. Hon. H. D. R.
Russell, Alexander West (Tynemonth)
Warrender, Sir Victor A. G.


Marsden, Commander Arthur
Rutherford, Sir John Hugo (Liverp'l)
Waterhouse, Captain Charles


Mason, Col. Glyn K. (Croydon, N.)
Salmon, Sir Isidore
Watt, Major George Steven H.


Mayhew, Lieut.-Colonel John
Samuel, Sir Arthur Michael (F'nham)
Wayland, Sir William A.


Meller, Sir Richard James (Mitcham)
Sanderson, Sir Frank Barnard
Wedderburn, Henry James Scrymgeour


Mellor, Sir J. S. P.
Savery, Servington
Williams, Herbert G. (Croydon, S.)


Mitchell, Sir W. Lane (Streatham)
Shakespeare, Geoffrey H.
Willoughby de Eresby, Lord


Molson, A. Hugh Elsdale
Simon, Rt. Hon. Sir John
Wilson, Lt.-Col. Sir Arnold (Hertf'd)


Morris, Owen Temple (Cardiff, E.)
Skelton, Archibald Noel
Windsor-Clive, Lieut.-Colonel George


Morris-Jones, Dr. J. H. (Denbigh)
Smiles, Lieut.-Col. Sir Walter D.
Womersley, Sir Walter


Muirhead, Lieut.-Colonel A. J.
Smith, Sir Robert (Ab'd'n & K'dlne, C.)
Worthington, Sir John


Munro, Patrick
Smithers, Sir Waldron
Wragg, Herbert


Nation, Brigadier-General J. J. H.
Somervell, Sir Donald



Nicholson, Godfrey (Morpeth)
Somerville, Annesley A. (Windsor)
TELLERS FOR THE NOES.—


Nunn, William
Southby, Commander Archibald R. J.
Major Davies and Lieut.-Colonel


O'Neill, Rt. Hon. Sir Hugh
Spears, Brigadier-General Edward L.
Llewellin.


Ormsby-Gore, Rt. Hon. William G. A.
Spens, William Patrick



Resolution agreed to.

NEW CLAUSE.—(Amendment of 10 & 11 Geo. 5, c. 18, s. 3.)

Section three, Sub-section (2), of the Finance Act, 1920, shall have effect as if for the words "three pounds twelve shillings and sixpence" the words "two pounds ten shillings" were substituted.—[Mr. Macquisten.]

5.28 p.m.

Mr. MACQUISTEN: I beg to move, "That the Clause be read a Second time."
I move the Amendment in the interests of the Chancellor of the Exchequer, whose revenue from this source has fallen year by year. In 1920 he estimated that he would receive about £65,000,000 revenue. The duty was raised to its present high figure of £3 12s. 6d. per gallon and the revenue has decreased from year to year. This year it is estimated that the amount will be under £30,000,000. Formerly the whisky duty paid nearly 20 per cent. of the entire expenses of the country. But the industry has been killed by over taxation and the yield has now sunk to something like 4 per cent. of the country's expenses. That has brought about a very hard state of affairs, especially in the Highlands of Scotland. This is a peculiarly Scottish industry and peculiarly a Highland industry. It was one of the main sources of the prosperity in the Highlands in years gone by. When
the right of private distillation existed every little crofter and fisherman had a small still and sold part of his product, with the result that these men were able to remain on the land and were a happy and contented people. After the right of private distillation was taken away in 1825, I think a great hardship was inflicted on them, and also on the barley grower in Scotland. To the Scottish farmer in Aberdeenshire who sells a field of barley the Chancellor of the Exchequer says: "If that crop of yours is taken and used for the object which nature has intended it to serve, I shall impose upon it a tax of £350 per acre." That is monstrous. The result of this taxation has been to create great hardship to the farmers. My people in Argyllshire are suffering from it intensely. We used to have 18 or 20 distilleries going at full blast in Campbelltown. Now there is only one and that is working only half time. There are only about a dozen in the Island of Islay, and several more in other parts. Many of the good fellows who were once employed in this industry have been long unemployed and have had to try and get other occupations on the land or on the sea, and all because the cost of this particular commodity has been raised to an exorbitant height. The high price in this country has caused a
like price to be charged in other parts of the Empire. If you go to Shanghai and Hong Kong, you will find that they have raised the tariff on this article because the British are the consumers. This high duty on whisky and spirits is of no use to the Chancellor of the Exchequer from the point of view of revenue or to the advocates of temperance.
It is no use trying to treat this as a temperance question. A high duty does not promote sobriety. Those who over indulged in this article just took to something else. We had a debate in this House some time ago on the increased drinking of methylated spirit, and I notice that in Glasgow they have now adopted a method by which they take a jug of milk and then a gas pipe—with which so many people have been committing suicide lately—put the rubber end from the gas pipe into the jug of milk and so get a commodity with which they can receive all the undesirable results of indulging in drinking methylated spirits. It only shows that all these methods have no value whatever in the promotion of temperance. People are temperate now because they have something more to do. The President of the Board of Trade once said that beer has been replaced by petrol. That may be so, although I cannot congratulate the right hon. Gentleman on the change; for the beer drinker to excess may slowly accelerate his own end, whereas the petrol user suddenly puts an end to other people. Nevertheless, it is the fact that the duties on whisky have nothing whatever to do with an increase in the temperate habits of the people. The cause is better education, a larger number of amusements, cinemas, greyhound racing and motors. They have taken people away into more healthy ways of life. The dullness and sadness of their lives have been lifted.
Whisky was invented in the first place as a medicine by the monks in Scotland in the early middle ages. For those who practise total abstinence there is no finer medicine for influenza or colds or rheumatism. Of course, if a man does himself proud and has various drinks per day, then of course he is taking away the virtue of whisky as a medicine. I urge that the Chancellor of the Exchequer would be wise to reduce the duty on spirits. What has happened in Canada?
The Canadian Chancellor of the Exchequer said as recently as the 22nd March:
With regard to Excise Duties, we are making an important change in order to protect our revenue. The present levy on spirits, which is seven dollars per gallon, is to be reduced to four dollars.
That, I believe, is about 36s. per gallon, and it is to be reduced to about £1.
Our revenues from spirits, including custom and excise duties, have fallen from 41,000,000 dollars in 1930 to 12,250,000 dollars in 1934.
We have fallen from about £64,000,000 in 1920 to £29,000,000 this year.
It is apparent from these figures that drastic action is necessary. Not only from our own point of view is this reduction expedient, but many of the provinces also have indicated the extreme difficulty of maintaining revenues which it is claimed are being seriously undermined through the unduly high rates of excise now obtaining and the wide discrepancy which exists between our rates of duty and those which are in effect in the United States. This lowering of the rate will bring our levies on spirits into line with those which prevail south of the border, and should be effective in eliminating illicit sales which would otherwise continue as a constant menace to our revenues. Our object is to secure increased returns by diverting into legal channels purchases which are now made illegally. Our gain will be at the expense of the existing illicit trade.
I do not think that we can say that there is not a large amount of illicit trading going on in this country. I have the greatest possible respect for the law-abiding population of this country, but there comes a point when rebellion becomes almost a virtue, and it would be very sad if we had to wait for the release of Al Capone for help from the other side, where after the repeal of prohibition the illicit trading went down, to enable us to escape from these extravagant duties. I do not think that anything of that sort will be necessary, because I know that the Chancellor of the Exchequer is a reasonable man and looks on this duty as an inheritance he has received from his rasher predecessor; and I am sure that he will at the earliest possible date make some effort to reduce the duties on these articles. I would urge him to take his courage in his hands and do so this year. He may say that he would lose £9,000,000 or £10,000,000. He would lose nothing of the kind. I will guarantee that he would make up the loss in a year or two. The
number of poor people who wish to purchase half a bottle of whisky for medicinal purposes is legion. On one occasion a doctor in the Highlands ordered whisky for an influenza-stricken family and the husband said that it took him two years' rent and more to cure his wife and family. His rent was £2 10s. There are many poor people to-day who have to purchase whisky not for indulging in the drinking of whisky but for purely medicinal purposes, and whisky was invented for this purpose by the Holy Fathers. I ask the Chancellor of the Exchequer to be courageous. There would be a great psychological effect if people were able to buy two bottles of whiisky for £1, instead of having to break a pound completely in order to buy one bottle. I am sure that the effect would be that if they found they could get two bottles for £1 they would pay the £1. The majority of our people are sober and temperate, and there is no question of this becoming a drink question. I have been for nearly 20 years trying to get some consideration for this problem, and surely at a time when cuts are being restored and all sorts of expenditure being incurred—£35,000,000 for a very necessary improvement of our transport facilities—the price of this comfort for our old people should be reduced to a figure which would make it not only the particular commodity and refreshment of the wealthy classes but that those who are comparatively poor and humble will be able to get a little of this comfort which Scotland invented and which has made Scotland known throughout the whole civilized world.

5.43 p.m.

Sir MURDOCH MACDONALD: I rise to support the new Clause. I do so because I think there is a reasonable case for the Chancellor to consider. The cost of the great war undoubtedly had to be met and it was a reasonable and easy method of raising money to put a tax on the luxuries of beer and whisky. Many people may think that for other reasons they should be heavily taxed, but to my mind it is doubtful whether the Chancellor of the Exchequer should endeavour to impose a tax for any other reasons except the actual finding of money; he should not heavily tax a luxury except for the purposes of finding the necessary revenue. If those who do not indulge in the luxury paid a comparable share of taxation in
some other taxes to the Imperial revenue, that is, those who do not indulge in the luxury of a little beer or whisky; if they paid comparable taxes in some other direction there would be no question of the taxes being justifiable if the Chancellor of the Exchequer wants the money. Sometimes a demand is made for a reduction of this duty on a ground which I do not support and which I felt my hon. and learned Friend was putting forward—namely, the suggestion that as whisky was a little more heavily drunk in Scotland than in England Scotsmen, therefore, were suffering an injustice in comparison with Englishmen, who were less heavily taxed on their beer. I do not support the new Clause on that ground. I have been looking at the figures in the White Paper issued by the Chancellor of the Exchequer for the years 1931–32, and if you take the two countries separately you will find that England paid about £99,000,000 in duties on alcoholic liquors and Scotland about £9,000,000. If you divide these sums by the population you will find that an Englishman paid about £2 10s. per head to the revenue and a Scotsman about £1 16s. Therefore, there is no real reason for suggesting a reduction in this duty because it happens that Scotsmen drink more of this particular liquor.
But there is a ground for a reduction in the duty, because last year the Chancellor of the Exchequer proposed a reduction in the Beer Duty and having done that he upset the balance as between the two countries. Indeed, the balance is now probably the other way and, therefore, I think there may be just reason for reconsidering the Whisky Duty and bringing it down to a more reasonable figure. I mean a reasonable figure comparable with beer. I do not ask for this reduction because I desire any one in Great Britain who already drinks to drink any more than he drinks now. After all, England drinks an enormous quantity of the whisky produced. England contributed in 1931–32 no less than £23,000,000 against the £6,000,000 or £7,000,000 contributed by Scotland. I appeal on behalf of those who are too poor to be able to afford reasonable refreshment. The proposal may increase the total consumption but I hope it will be counter-balanced by a continual increase, as has been happening for many years, in the sobriety of the whole popu-
lation. I hope that those who drink to excess will so reduce what they consume that in the final result there will be no greater quantity consumed in the country.
There is no doubt whatever that a very great change has been taking place in the outlook with regard to drink. I know that in the case of whisky very much less is drunk. For instance, in 1913 the country consumed 26,000,000 gallons. Last year the figure was 9,500,000 gallons. I am also aware that there has been an enormous decrease in drunkenness throughout the country. In Scotland that has been most marked. I hope and believe that a change of habit has come over the general population. If I thought for a moment that this reduction in duty would have the effect of increasing drunkenness once more, I would not press for consideration of the matter. On the ground, first, that those who indulge in the consumption of beer or whisky should be as equally taxed as possible, I suggest a reconsideration of the tax on whisky. I ask for the reduction, secondly, because I think it is not right for the Government to impose tax legislation for the attainment of a moral end, or that the vast millions who do not abuse either beer or whisky should be specially mulcted in revenue apart from the rest of the population.
If the Government think it right to ask for a moral deterrent in the matter of drinking to excess, then the method of approach ought to be the method adopted in other phases of wrongdoing, for instance in the case of cocaine and kindred substances. Those things are not so taxed as to make the purchase of them impossible because of the expense. What has been done has been to enact penal laws against their sale except for specified medicinal purposes. In the case of drink people can destroy themselves just as they do in the case of cocaine, but those who sell to them, or the imbibers themselves, are not sufficiently deterred by the existing law. How seldom do you read of the case of a publican losing his licence because a drunken person has been seen coming from his premises? Ten times more drastic regulation is required in this direction. Far greater punishment and obloquy should be imposed on those who drink to excess. They are a curse to themselves and a danger to the community.
Their actions result in eventual cost to the community. Yet they are lightly dealt with, and they cause vast numbers of their fellow-countrymen who, like myself, use liquor in extreme moderation, to pay unjustly a larger share to the revenue than we ought to pay.
I therefore hope that the Chancellor will be able to review the position, and if he is not now able to accept this reduction I hope he will at least give an indication that an attempt will be made more equally to allocate the burden of taxation on those who pay for the use of these luxuries. If there is any fear of people drinking to excess as a consequence of any reduction of the duty, he can get his colleagues in the Ministry to introduce really penal legislation against abuse.

5.52 p.m.

Mr. RHYS DAVIES: I think the Committee will feel, like myself, that we are at a loss in a Debate of this kind in not having with us the hon. Member for Bodmin (Mr. Isaac Foot) and the Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor). Our proceedings would have been enlivened considerably if they had been here. I have always interested myself in the proposals of the hon. and learned Member for Argyllshire (Mr. Macquisten) regarding whisky. This is not the first time he has introduced this subject on the Finance Bill. I was exceedingly interested also to hear the speech of the hon. Member for Inverness (Sir M. Macdonald), because somehow it seemed so very appropriate that a great water engineer should deal with whisky, as the two things are mixed on occasions, I understand. I should say, however, that the speech of the hon. Member for Inverness contradicted in a measure the purpose of the new Clause. He does not want a reduction of the duty in order to increase the consumption of whisky, but the hon. and learned Member for Argyllshire deliberately said that he wanted increased consumption and that that was why he was proposing to reduce the duty.

Mr. MACQUISTEN: My hon. Friend the Member for Inverness (Sir M. Macdonald) said he did not want those who were drinking whisky now to drink any more, but that he wanted a lot of other people, poor individuals, to be able
to get it. I do not like to see mankind divided into two classes, those who can afford to buy all the drink that they require and those who require it but cannot afford it.

Mr. DAVIES: The point about the poor is a very plausible argument. I would like to see the poor workman who can afford to buy two bottles of whisky at £1, however much the duty is reduced. In arguing thus the hon. and learned Member is just playing with the subject. I feel sure that the Chancellor will not accept this proposal. He has told the House of Commons on many occasions, and I think every Chancellor we have heard on this subject has said that he has nothing whatever to do with the moral issues of imposing taxation on drink; he has to deal only with the problem from the financial point of view. Indeed, if he finds that he can raise revenue easier he will impose taxation even on methylated spirits.
I do not want to deal with the subject at any length, but I do want to say that I believe the behaviour of society is gradually improving because of the reduction in the consumption of spirits. I have no hesitation, however, although I am a teetotaler, in distinguishing the evil effects of drinking spirits as against drinking wine or beer, and I rejoice that there is a very much great reduction recently in the consumption of spirits than we have had for years. The hon. and learned Gentleman said that the trade had been killed because of heavy taxation. I think, on the other hand, that it has been killed because it has been found out; the evil effects of drinking spirits have become obvious long ago. Then the hon. and learned Gentleman said it would be a good thing if whisky was treated as medicine. I suppose it would be all right to put it into that category if the distillers had the right to appoint the doctors. Then we would easily see what might happen. Consumption would then depend upon the doctor, I suppose.
The hon. and learned Gentleman has spoken once or twice on this subject before. I do not approach the problem from the same angle as some other opponents of the trade. I have fundamental objections to this as I have to a lot of kindred trades, and that fundamental objection is this: So far as it lies
in. my power I decline to allow any person or group of persons to combine together in order to exploit for their personal profit the known weaknesses of their fellows. I think that that is a good case upon which to base my argument. The hon. and learned Gentleman did not tell us anything about the profits of the distillers. I do not know very much about them, but it does not always follow that profits decrease when trade declines. If the drink trade wants to save let it save some of the money that it spends on advertising at the present time. I would like to know how much they spend under that head. The distillers and the brewers seem at the moment to occupy nearly half the hoardings of the country with their advertisements. Incidentally, the National Government take a good share of the space too. It seems quite appropriate on occasions to find at one: end of the hoarding "Drink whisky," or "Beer is best," and then "Support the National Government." They are a wonderful trinity; they belong to each other rather closely on occasions.
The hon. and learned Member spoke of rebellion. That was a strange argument to come from him. With my Celtic imagination I could almost picture the crofters of Scotland marching down to London with a bottle of whisky each and making an onslaught on the Chancellor because of this duty. The hon. and learned Gentleman said that a rebellion on this particular issue was quite justifiable. I would like the hon. and learned Gentleman to make the same sort of comment when we are dealing with indirect taxation on the food of the poor. It is a neat commentary on the hon. and learned Gentleman and his friends that though they argue this case of the poor and whisky, we never find them arguing the same case for the poor in the matter of bread and bacon.
I rejoice to see a reduction in the consumption of these spirits. I am positive from my personal knowledge that of the three or four evils which the human race has to contend with, drinking spirits is one. It is one of the greatest of all evils. I would not have the same objection to the drink traffic if it maintained the victims of its own doings. If the cost of maintaining the victims and policing the streets were thrown upon the distillers and the brewers the case would not probably be presented as it is put
forward to-day. I object to the community having to maintain people who have been reduced in the social scale by the distillers and brewers of the country.

6.0 p.m.

Sir IAN MACPHERSON: I rise to reinforce the arguments which have been put forward by my hon. Friend the Member for Inverness (Sir M. Macdonald) and my hon. and learned Friend the Member for Argyll (Mr. Macquisten). I listened with great interest to the speech of the hon. Member for Westhoughton (Mr. Rhys Davies) as I do to almost every speech he delivers, and the gist of his remarks appeared to me to be an attempt to justify punitive taxation. The real case against this Whisky Duty is that it has not the virtues or vices of ordinary taxation. It is a vicious tax in itself, in that it is a punitive tax. I agree that whisky ought to be taxed and taxed heavily. I agree that beer ought to be taxed and taxed heavily. But what do we find in the case of whisky? On every bottle of whisky produced in this country the tax is 8s. 5½d. It is essentially an unfair tax and it is upon that ground that I object to the amount of this duty. I can see the difficulty which the Chancellor of the Exchequer experiences in this matter. This tax has been in existence for a long time and my right hon. Friend will no doubt tell us that the Chancellorship of the Exchequer has no concern with morals and that the holder of that office has to find the money somewhere. I agree, and I should be the last in the world to place any obstacles in his way if the taxation proposed was, in my judgment, fair. But, as I say, this is an unfair tax. Even the most ardent total abstainer must admit that it is unfair and is contrary to all policy underlying taxation in this country.
In my constituency there are a great many excellent farmers who for many years have cultivated barley, and I was astonished to find during a recent tour there that they now find it impossible to sell barley. They tell me that if the duty was reasonable, if, say the bottle of whisky was made to cost 10s. instead of 12s. 6d., the distillers up north would take every acre of barley produced. But what are the facts? As my hon. and learned Friend the Member for Argyll has pointed out, the farmer who grows
an acre of barley is taxed by the Chancellor of the Exchequer to an extent of £350 upon that acre. As I say, I realise that the Chancellor has his difficulties but I think in common fairness it must be admitted that the time has now come for a reconsideration of this tax.
We do not ask that the tax should be abolished. We do not want it to be otherwise than heavy. But we do ask that it should be reasonable and we ask that on behalf of the farmers in the North and East of Scotland, many of whom have been experiencing great difficulty in making ends meet. One of their greatest difficulties they ascribe to the existence of this punitive tax, and I think that in their interests my right hon. Friend the Chancellor ought to look sympathetically upon the views which have been expressed to-day. It may be impossible for my right hon. Friend to do anything this year. But in the interests of the farming community and of the country as a whole, I think he ought to make this an occasion for pointing out that in the future there is some hope of a reduction in this tax. I sincerely hope that he will be able to give us some indication to that effect. I can assure him that the farmers in the East and North of Scotland are unanimous in their detestation of this tax which is injurious to them and is, from the point of view of taxation generally, unfair in its incidence.

6.6 p.m.

Sir ROBERT SMITH: I desire to deal with this matter solely from the agricultural point of view. It is an admitted fact that farmers in the North-east of Scotland are in a very bad way at present. One understands from what appears in the newspapers that the Government are anxious that the farming industry should be put upon its feet. I suggest that the Chancellor of the Exchequer should discuss this question of the Whisky Duty with the Secretary of State for Scotland, who is also head of the Department of Agriculture for Scotland and who can inform my right hon. Friend of the serious position in which the farmers of the North-east have been placed, as a result of the lack of demand for barley. Therefore, I support the plea put forward by the right hon. and learned Gentleman the Member for Ross
and Cromarty (Sir Ian Macpherson). We only ask for fairness. This is a penal tax and we fail to see why penal taxation should be placed on the national drink of Scotland when, a short time ago there was a reduction in the duty on beer. Here is an opportunity to do something for these farmers. Negotiations are going on with regard to the meat question in order to help the agriculturists. In order to help the farmers in the Northeast of Scotland, through a difficult time until the Government deal with the meat situation, let them reduce the taxation on whisky and thus place the farmers of the North-east and the growers of barley generally in a much better position than they are in to-day.

6.8 p.m.

Sir WILLIAM DAVISON: On one point there has been unanimity, namely, that the sole question which we have to decide for ourselves, in voting on this Amendment, is whether or not the proposal will be advantageous to the revenue. We have often heard from Chancellors of the Exchequer that it is impracticable to visualise the revenue of the country for one particular year only. The Chancellor has to satisfy Parliament that the rate of duty which is being charged on a, commodity will, in the long run, bring in substantial revenue. I have not had an opportunity of looking up the figures, but if my recollection is right the revenue derived from this tax on spirits has been continuously and rapidly falling for many years past. I think, indeed, it has fallen from about £60,000,000 to about £29,000,000 in the year. If a business firm found that a particular branch of its business was diminishing, its directors would set themselves to consider whether, for instance, the decline was due to the high prices which were being charged, and, if so, whether those high prices were justified. If they came to the conclusion that high prices meant diminishing sales, it would be their obvious duty as well as their interest to reduce the prices.
When we discussed the beer duty last year the Chancellor of the Exchequer emphasised the point that the goose which had laid so many golden eggs was being gradually killed. In the case of the beer tax he argued that in the long run the revenue, so far from losing by the reduction, would be the gainer. I submit that
that argument applies with even greater force to the duty on spirits. We all rejoice at the great advance in temperance in this country during recent years. That advance has been due to improved education, a higher standard of life, more amusements, and a general feeling throughout the land that drunkenness is a disgusting thing. On the other hand, without going so far as my hon. and learned Friend the Member for Argyll (Mr. Macquisten) in saying that whisky is an ancient and spiritual as well as spirituous cordial, I think many people who can afford it find a moderate amount of whisky with their meals, or with one meal a day, an advantage. It is a fairly general practice among better-off people to take a little whisky with dinner, and many feel better in health as a result.
If I thought that a proposal of this kind would mean a tremendous outbreak of drunkenness I would not support it for a moment. But I do not believe that such would be the case, and I think it is unfair that I should be able to indulge in a half glass of whisky with my dinner, when thousands of people who would be equally benefited by it, are unable to indulge in it because they are not well enough off to afford it. It is for those reasons but primarly because of the penal nature of the tax that I support the appeal for its reduction. After all, this is a tax of something like 8s. 5d. in every 12s. 6d. bottle of whisky. Can the Chancellor say that if a penal tax of that character is maintained the revenue can ultimately benefit? is it not the case that the revenue is actually falling and if so, would it not be better to consider the reduction of the tax if not this year at any rate next year?

6.12 p.m.

Colonel GRETTON: In this matter I am a disinterested spectator, and I desire to endorse the views expressed by the right hon. and learned Gentleman the Member for Ross and Cromarty (Sir Ian Macpherson). He quoted another hon. Member to the effect that the tax was something like £350 on an acre of barley. The tax of course is on the whisky, but the effect of the tax on the whisky is that many fewer acres of barley are grown and much less barley is malted and distilled. That is where the farmer suffers. Many farmers in the districts where barley was formerly grown
have lost their business altogether as a result of this tax. It is playing havoc with their farming. It must be admitted that the tax is inordinately high. As a spectator in this matter, one who is indifferent and neutral, it seems to me to be really worth the Chancellor's while to consider whether he should not, in order to stabilize the revenue, make a substantial reduction in the tax. As we have heard, the revenue from it is steadily falling and apparently at the present time it has not reached the bottom point. When such a strong case has been presented on a question about which I know something, I find it difficult to remain silent, and that is my excuse for this brief intervention in support, not necessarily of the particular reduction proposed, but of the appeal that reconsideration should be given to this question.

6.13 p.m.

Mr. LOVAT-FRASER: My hon. and learned Friend the Member for Argyll (Mr. Macquisten) spoke of whisky as a medicine. It may interest the Committee to know that the Gaelic word uisge from which our word "whisky" is derived means water. Originally the term used was uisge beatha or "the water of life," but people got into the habit of dropping the latter part and the consequence is that when you ask in the Highlands for a glass of whisky you are, in strict parlance, asking for a glass of water. My hon. and learned Friend spoke of the decline in drunkenness in Scotland, and I can heartily endorse what he said. The spread of education, the greater number of interests which the people have, the development of the wireless and the hundred and one other things have made life in the remote Highland villages and among the mountains much more interesting than it formerly was. I have in the remotest Hebridean Islands heard Big Ben strike ten o'clock and that represents what has been going on in the Highlands.
But my hon. and learned Friend omitted from his list of the causes of reduced consumption of drink one which I think is most important and one which I confess influences me in regard to the question now under discussion. The main cause in reducing drunkenness in Scotland and, I suppose, in England too
is the fact of the rise in the price of the article. It is because I am afraid that the reduction in the price of liquor would bring back drunkenness that I regard this proposal with grave suspicion. I can remember, and I think my hon. and learned Friend the Member for Argyll can also remember, Saturday night in the cities of Edinburgh and Glasgow, and I am sure he would be very sorry to see restored again the state of things that was exemplified in those cases. I was reading on Friday last the last volume of the great survey by Charles Booth of life in London, and the compiler of the book points out the great decline in drunkenness, but he is honest, and he is careful to add that while that decline in drunkenness is a matter for satisfaction, it must not be assumed that it would continue if the price of drink were once again lowered and people were able to buy larger quantities of drink for the same amount of money. It is because of my doubt as to the results of reducing the taxation on whisky that I must appeal to the Chancellor of the Exchequer not to accept the Clause but to maintain, as the guardian of the sobriety of the people, the present cost of whisky.

6.17 p.m.

Mr. GURNEY BRAITHWAITE: While listening to the hon. Member for Lichfield (Mr. Lovat-Fraser), I could not help wondering what the great Dr. Samuel Johnson, who was connected with that city, would have thought if he could have listened to that declaration. I rise, as representing an English industrial constituency, to put what I believe to be the average point of view with regard to this matter.

Mr. LOVAT-FRASER: May I remind my hon. Friend of what Dr. Johnson said? Dr. Johnson, himself an abstainer, said he abstained because he found it easier to abstain than to be moderate.

Mr. BRAITHWAITE: What is rather more to the point is what he drank, and I do not think history is in much doubt on that matter. In any case, quite apart from the merits of Dr. Johnson, the good people of Lichfield will read with great interest the speech that has just been delivered by their representative in this House. The hon. Member for Westhoughton (Mr. Rhys Davies), who really brought me to my feet, said we missed
the hon. Member for Bodmin (Mr. Isaac Foot) and the Noble Lady, the Member for the Sutton Division of Plymouth (Viscountess Astor) in this discussion. If I may say so, he has made an able understudy, because it is a long time since the Committee has heard a speech so overloaded with prejudice as the one he made this afternoon, and I am bound to say with respect that I think the Opposition have been a little unwise in putting up on this Clause such a spokesman. I wonder if the working class will endorse some of the sentiments to which the hon. Member gave utterance. He asked if we could tell him of any working man who would buy a bottle of whisky for 10s. Does he really think that when a working man or anybody else has a drink of whisky, he drinks a bottle? Does he not know very well that a reduction in the duty would result in a reduction of the price of whisky as sold by the tot in the various establishments for that purpose all over the country, and that what really happens is that whisky has been put out of the reach of poor men in this country?
Those who talk of the iniquity of the drinking of whisky are really advocating prohibition and had better say so. The hon. Gentleman's speech, like that of the hon. Member for Lichfield, is really, when translated into plain English, a plea that the rich man can drink as much whisky as he likes and that the poor man is to have none, and I cannot think that the working classes will endorse that. But the hon. Member went on to say something else. He said he stood at that box to protest against any combination of people making profits out of the weakness of their fellow men. Are we to take it that the co-operative societies will cease selling whisky after that declaration? Surely, if the co-operative societies are going to make a profit, as they are always so careful to do—

Mr. RHYS DAVIES: Can the hon. Member name any one co-operative society that is selling whisky?

Mr. BRAITHWAITE: I think it, is common knowledge that it is perfectly easy to purchase whisky at any rate at a great number of co-operative society establishments.

Mr. DAVIES: No.

Mr. BRAITHWAITE: If not whisky, then certainly beer. The hon. Member then went on to say that he would welcome support on this side of the Committee for a reduction in the price of foodstuffs, and he instanced bread and bacon. Bread and bacon are both considerably cheaper than they were when he sat on the Treasury Bench, but whisky remains at the same price. He went on to say that the drink trade, those who indulge in the selling of drink, should support the victims of their own campaign. He might as well say that his party should be called upon to support the 1,750,000 people who lost their employment while his party were in office. It would be just as logical an argument, and I think that when the Opposition put up hon. Members to talk on a Clause of this kind, they should try to free their minds from prejudice. I do not represent an agricultural constituency, but I think there is very great force in the arguments of hon. Members who have spoken in this Debate on behalf of the farmers. I do not believe for a moment that the country is going to perdition if the price of a bottle of whisky is reduced by half-a-crown. We have already seen, during the Jubilee celebrations, that the people are able to take advantage of extended hours and at the same time maintain their sobriety and good conduct. The same thing would happen if the price of whisky were moderately reduced. While realising the difficulties of my right hon. Friend in this matter, I hope the Mover of the Clause has staked out a claim for consideration in the future.

6.23 p.m.

Mr. CHAMBERLAIN: This proposition to reduce the tax on whisky is one which generally comes up in a Budget discussion, but the Committee will at any rate welcome this subject, if only for the fact that it has produced one of those eloquent and amusing discourses from my hon. and learned Friend the Member for Argyll (Mr. Macquisten), in which he described to us the pious origin of whisky, the addition that it makes to the gaiety of nations, its value from a medicinal point of view when administered three times a day neat or in a little water, and the comfort it is to the aged poor. He and some others who have spoken in the Debate have said that taxation ought
not to be used to bring about moral purposes. I hope I need not repeat what I have so often said before, that at any rate in this particular matter the considerations which have weighed with me, as they have weighed with my predecessors, are not moral considerations; they are financial considerations. I will go farther and say that in my own view, supposing that I thought the whisky trade was injurious to the health of the people of this country, I would not consider that the right way to stop it would be by putting on penal taxes.
But having said so much, of course, I am unable to accept this Clause, because it would cost me too much money. While anybody may form their own opinion as to how the revenue might increase in some future years, I do not think anybody on the evidence can doubt that the immediate result would be to make a substantial hole in the revenue of the year. One has always, in estimating these things, to make certain assumptions, and if I may make these assumptions, that one-quarter of the present imported supply were diverted to homemade spirits, and moreover that the aggregate consumption were to rise by 15 per cent., a not unreasonable assumption, the revenue would lose nearly £6,000,000 in a full year. If I were to make a remission which cost me £6,000,000, I should have to find that money from some other source, and I do not know of any source from which I could find it.
When some hon. Members make a comparison between my treatment of the Whisky Tax and my treatment of the Beer Tax, I would remind them once again that the increase in the Beer Duty was one of the emergency taxes imposed in 1931, and I have always taken the view that the emergency taxation must be dealt with first before one could deal with other large alterations or modifications of taxation. The question of the revenue came in in considering the priority that I could give to the restoration in respect of the emergency burdens, and I felt that I could not wait, as I might otherwise have waited, until a later year, but I made the decrease in the duty, not last year but in 1932, because the revenue was being undermined to so great an extent. I am not prepared to say that a reduction in the
Whisky Duty would not eventually stop the decline in the revenue which is taking place to-day, and I have gone even further in the past. Only last year I expressed my views about the Whisky Tax when I said:
I do not mind saying that, in my view, the tax on whisky is too high. I think that it is unreasonably high in modern conditions."—[OFFICIAL REPORT, 12th June, 1934; col. 1641, Vol. 290.]
I went on to point out that it was fixed at a time when the sources of our indirect taxation were much more limited than they are to-day, and I said that I did not suppose that, if we had been a protectionist country years ago, the whisky tax would have been put up to the point it has now reached. Therefore, my position is that I appreciate the fact that this tax is altogether out of proportion to the present system of taxation, and I appreciate that it has unfortunate repercussions upon one branch of agriculture, especially in Scotland. I think that those who have to bear this tax have a good case to ask for the consideration of the Chancellor of the Exchequer whenever the financial conditions of the country permit him to undertake a reconstruction of taxation which would cost him a considerable sum. That time has not yet arrived, and, therefore, I can only say to my hon. and right hon. Friends who have addressed me on this subject that in principle I think there is a great deal to be said in favour of the views which they have put forward, but if I cannot give a more favourable reception to this Clause to-day, that is not because I think that fundamentally the Clause is unfair or wrong, but because the financial conditions of the country are such that I cannot at present afford it.

Question "That the Clause be read a Second time," put, and negatived.

The TEMPORARY CHAIRMAN (Lieut.-Colonel Sir Charles MacAndrew): Mr. Oswald Lewis.

Mr. DAVID MASON: On a point of Order. Will you give a Ruling why the Clause standing in my name (Annual account of Exchange Equalisation Account) is not called? Your predecessor very kindly said he would give a Ruling. Perhaps you do not care to do so, but there are many Members of all parties who desire to have a discussion on this subject, and if you could see your way to give a Ruling, it would be of interest.

The TEMPORARY CHAIRMAN: The Clause mentioned by the hon. Member is out of order because it is incomplete. It would require an Amendment of the existing law, and, therefore, it cannot be accepted in the form in which it appears on the Paper.

Mr. MASON: Do I understand that if the Clause were drawn otherwise, it might be accepted on the Report stage?

The TEMPORARY CHAIRMAN: I cannot answer that question.

NEW CLAUSE.—(Reduction of duties on certain licences.)

The duties on the following excise liquor licences, that is to say, retailers' on-licences for spirits, beer, or wine, retailers' off-licences for spirits, beer, or wine, shall be reduced by twenty-five per centum.—[Mr. Wise.]

Brought up, and read the First time.

6.30 p.m.

Mr. WISE: I beg to move, "That the Clause be read a Second time."
This proposed Clause is an old annual, but I should like to urge my hon. Friend the Financial Secretary to take it into extremely favourable consideration this year. It would not cost a great deal of money, and I think he will agree that in principle it is sound. When these licence duties were originally imposed they undoubtedly, in the mind of the Government at the time, bore a relation to the number of hours in which these commodities were able to be sold. It was stated on more than one occasion that that relation existed. Since that time the hours in which a public house can open have gone down from 19½ before the War to eight to-day. It, therefore, seems only fair that there should be some reduction in the licence duty which has to be paid. Licensees to-day have to face considerable competition which was not envisaged when the licence duties were first imposed—the competition of the so-called club which, for a very small licence fee, is able to sell drink for the same period as a public house can. Indeed, in many cases, by a little judicious evasion of the law, it can sell it for many more hours in the year.

Mr. ISAAC FOOT: These people are not licensed at all. They simply have to pay a registration charge of 5s.

Mr. WISE: It is true that there is only an annual registration, and that, I think, makes my case stronger, because these clubs, which are in many cases neither more nor less than concealed "speakeasies" and have practically no qualifications for membership, are competing unfairly with people carrying on a legitimate business. I would like the Committee to remember that licensees have a considerable standard of cleanliness and order to maintain in public houses. They are subject to constant police inspection, if necessary, and to a heavy penalty if they supply liquor to a man who is slightly inebriated. None of these things apply to their competitors, and it is only fair that some effort should be made to reduce their burdens. If we are to have drink sold at all in this country—and most of us think that it is not only necessary but desirable that drink should continue to be sold—we should encourage the conditions under which it is purveyed with the greatest respect for public health and public comfort. For that reason I would ask my hon. Friend to see whether he cannot seriously consider this proposal this year. I cannot give an estimate of what it would cost, but I do not think that a 25 per cent. reduction in these licence fees would unbalance an otherwise sound Budget.

6.35 p.m.

Mr. COOPER: The hon. Member has moved his proposed Clause in very reasonable terms, and I acknowledge at once that the proposal is perfectly reasonable. I think that a great deal of what the Chancellor of the Exchequer said in reply to the last new Clause will apply equally to this. The hon. Member was not able to give an estimate of what it would cost, but we are advised that it would probably be £1,000,000, which, the hon. Member will understand, we cannot afford to give this year. We have done something in another Clause for the smaller holders of licences, which I hope will be of real benefit to them, and I trust that the hon. Member will not press us to do anything more during the present financial year.

6.36 p.m.

Colonel GRETTON: I spoke two sentences on this subject during the Second Reading of the Finance Bill, and acknowledged the concession which the Government had made to the holders of smaller
licences. It was a sensible and most acceptable concession. This question of a reduction in retail licences has been placed before the Government more than once, and more than one Chancellor has admitted that the retail licence duties are too high having regard to the changes that have been made in the licensing laws. They are now excessive. We have had many words of sympathy from the Government that something will be done—but never this year. I agree that it is hopeless to expect to carry this proposal to-day, but I desire to support the protest that has been made against the duties as they stand and, as far as possible, to earmark this subject for consideration on the first available occasion. As my hon. Friend in proposing the new Clause pointed out, licensees have to face competition which they had not to face years ago when the amount of licence duties was fixed. Moreover, there has been a considerable reduction in the sales of the articles, which it is their business to purvey to the public, owing to heavy taxation and other causes, and there can be no doubt that this is a case which claims very early attention. Sympathy without action in this matter is not very comforting and carries us no further, and I trust that something will be done in the forthcoming Budget.

Mr. WISE: In view of the kindly sympathy of my hon. Friend the Financial Secretary and the hope that something will be done when we are less burdened with Supplementary Estimates, I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave, withdrawn.

NEW CLAUSE.—(Deduction in respect of relatives taking charge of children of divorced person.)

As from the passing of this Act, section nineteen of the Finance Act, 1920, shall apply to a claimant whose marriage has been dissolved and who has been given the custody of any children of the marriage as it applies to a claimant being a widower except that for the purpose of such a claim the words "or of his deceased wife" shall not apply.—[Mr. Turton.]

Brought up, and read the First time.

6.38 p.m.

Mr. TURTON: I beg to move, "That the Clause be read a Second time."
The purpose of the Clause is to remedy a very small, but very real, injustice
under the Income Tax Acts. The amount involved in revenue is so small that I hope the Financial Secretary will regard it not from the point of view of pounds, shillings and pence, but from the point of view of justice, because the number of persons involved is not very large. Let me remind the Committee of the position. If a member of the Committee marries and has children, he gets a personal allowance of £170 in order to help his housekeeping, and he has the advantage of having his wife to look after the children. If his wife unfortunately dies, he becomes a widower and is entitled to the special allowance of £50 for a housekeeper in order to look after his children. If his wife does not die, but he has unfortunately divorced her, he is in the position that he has no wife, the court gives him the custody of the children, and he gets no allowance under Section 19 of the Finance Act, 1920.
I feel that when this section was drafted by Parliament it did not consider the invidious position of the man or woman who has to pass through the divorce court and has to look after the children. Many views are taken on divorce, and I do not want to go into them. I do not really appeal for the divorced person, but for the divorced person's child. There is no more difficult position in the world than that of the child of divorced parents, and I hope that the Committee will do everything it can to see that such a child is properly looked after by consenting to this allowance in respect of any kind relatives, or some kind uncle or aunt, or, if no relative is available, some other person under Section 19 who looks after the child. The proposed Clause has one great merit, that, as far as I know, it is not a hardy annual or even a hardy biennial. It has never been proposed before, although there have been cases in the courts where, somewhat rashly, a divorced person thought he was entitled to this allowance, only to find that he was sadly deceived. As this is the first time which such a new Clause has been moved, I hope that the Financial Secretary will allow it to be one of those flowers which are allowed to bloom only once, and then are pressed between the leaves of the Statute Book.

6.42 p.m.

Mr. COOPER: I am afraid that my hon. Friend's proposed new Clause will not
find itself crushed between the leaves of the Statute Book this evening. I do not know whether he was in the Committee the other day when a similar Amendment was moved by the hon. Member for Westhoughton (Mr. Rhys Davies), which applied to married people living apart. That Clause, however, did not include the children. My hon. Friend hoped by his new Clause to correct an anomaly under the existing law, but, in fact, it would create many more anomalies than it would remove. The difficulty always is that one moment of weakness in these matters of taxation opens the door to a flood of Anomalies, and compels one to make many other concessions that are not anticipated at the time. The original concession in this matter was to the widow or widower with children who was given a special allowance in respect of a housekeeper whom it was necessary to have to look after the children. The Government of 1924 rather weakly gave way on the important point whether there should be children or not, and since then successive Governments have had to resist proposals of this kind and of the kind that the hon. Member for Westhoughton moved the other day.
I would like to state some of the anomalies which it would create. Suppose, for instance, the new Clause were agreed to and an allowance were made in the case of divorced persons where there were children, the demand would be made for the allowance where there were no children, as occurred in the case of the widow or widower. As my right hon. Friend has said already to-day, we cannot in this financial Measure have any views in regard to encouraging or discouraging immorality or morality. Once the allowance is given in respect of a divorced person living alone, what justification would there be for denying it to a single person living alone? A divorced man would be entitled to an allowance in respect of his housekeeper, and the young bachelor who had done nothing that he should be ashamed of would be denied a similar allowance. As the Clause stands it would, as far as I can see, make no provision for the case where the custody of the children was divided, where for six months they went to one parent and for six months to another parent. That would create a difficulty
with which the Clause as drafted would not deal. Another difficulty is that the divorced person would be able to claim exemption as long as the children were alive. They might grow up and he might no longer be under any obligation to maintain them, but he would still be granted this allowance.

Mr. TURTON: Surely the word "child" is governed by the interpretation in the Finance Act, 1920, where exactly the same words apply?

Mr. COOPER: Those who have studied the wording of this new Clause very carefully assure me that the divorced man would still be entitled to an allowance for his housekeeper long after the children had ceased to be a burden on him.

Mr. TURTON: Surely Subsection (2) of Section 19 of the Finance Act, 1920, makes that point of no avail. It says:
In this section the expression 'child' means a child in respect of whom a deduction is allowed under this Part of this Act.'
That governs the age limit.

Mr. COOPER: According to this Clause, in a case where a person's marriage has been dissolved and he has been given the custody of any children, those words are not to apply, but it does not say for how long they shall not apply. There is another weak point about the Clause. I pointed out in reply to a case put the other day by the hon. Member for Westhoughton that it would really pay a husband and wife to live apart rather than together, and in this instance it would be to their advantage to be divorced. A couple might have had an unhappy marriage and decided to live apart, wishing to avoid the unpleasantness of going through the Divorce Court, but if this Clause were passed they would be compelled to go through the ceremony—[Laughter]—the unpleasant process of the Divorce Court in order to obtain the alleviation which my hon. Friend desires to give them. As the Clause would open the way to so many other anomalies and so many other similar pleas, and would really not effect the object which my hon. Friend has at heart, the Government cannot accept it.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE—(Amendment as to moneys payable under policies of life insurance effected for purposes of estate duty.)

If any person makes an insurance on his life, or on the life of any other person, with any insurance company legally established in the United Kingdom or in any British possession, or lawfully carrying on business in the United Kingdom, and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured, and that so much as the holder of such policy or his legal personal representatives may direct of the capital sum payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty then, to the extent to which such capital sum is so paid and applied, the same shall not be aggregated with any other property for the purpose of fixing the rate of estate duty, but shall form an estate by itself.—[Sir W. Davison.]

Brought up, and read the First time.

6.50 p.m.

Sir W. DAVISON: I beg to move, "That the Clause be read a Second time."
Some of my hon. Friends and myself had put down another Clause, which stood first on the Order Paper to-day, having the same object in view, and we naturally think that it is a better Clause than the one which has been selected, but this Clause is, at any rate, a step in the right direction. As the Committee are aware, if a person insures for such a sum as will be required to pay the death duties on his estate when he dies, the amount of that insurance is added on to his estate and death duties have to be paid on the insurance money as well as on the estate. Further, by adding the amount of the insurance money to the estate the rate of duty is increased. Therefore, very few people take out insurances to cover death duties. It does not pay them to do so. If this Clause were added to the Bill it would benefit the State and benefit the individual. It would benefit the State by checking this annual raid on the national capital, for, after all, the capital of the State is only the capital of the individuals who compose the State. It would benefit the individual by preventing the break-up of estates by reason of the large payments of duty which have to be made after the death of the owner. During the last
seven years the State has made a capital levy of some £551,000,000 on individuals, an average of approximately £80,000,000 a year. This year the Chancellor estimates that the capital levy which he will make following the deaths of taxpayers will amount to £80,000,000.
In past years the Financial Secretary to the Treasury has usually been put up to reply to the plea for this just amendment of the law, because the Chancellor of the Exchequer has not wished to undergo the ignominy of defending it himself and, therefore, has astutely retired. We have generally been told that while the Chancellor has every sympathy with this proposal the loss involved would be too great. Last year the then Financial Secretary indicated that the loss would be anything up to £20,000,000. I took the trouble to go into the matter afterwards. I shook my head at the time, but there is not much object in shaking one's head in the House of Commons. I found that the Treasury had arrived at the sum of £20,000,000 by assuming that every person liable to estate duties—amounting to some 280,000,000, a year as I have said—took out an insurance for the full amount, and that all the duties on those insurances were lost to the State. As I have indicated, that is very misleading. People do not take out insurances, because it does not pay them to do so.
Hon. Members may have seen an interesting letter in the "Times" month or so ago from a gentleman who pointed out that he had just read in the Press that the National Exchequer was expected to benefit by nearly £1,250,000 from the estate of a Mr. X. He pointed out that this estate of 22,500,000 originally produced, at four per cent., an income of £100,000 a year. At present rates of Income Tax and Surtax the State derived from this income an annual revenue of £58,970 a year. By the death of the owner a sum of £1,250,000 would be taken away and the estate reduced by one-half. This reduced estate would bring in an income of £50,000 a year, instead of £100,000 as previously. Therefore, the State would have the taxation only on £50,000 a year instead of on £100,000, and that would mean that the State would receive £27,096 in Income Tax and Surtax in place of £58,970. There is a permanent
loss of revenue of £31,875 a year. It would appear that the revenue authorities do not calculate the enormous losses of Income Tax and Surtax which are suffered by using this individual capital as national revenue. If the money raised by death duties were applied to paying off debt there would be more to say for it; there is no justification for applying the money to the revenue of the year.
It would not be in order for me to expound at any length the serious effects of this duty on the estates of private individuals. Last year the hon. and gallant Member for Newbury (Brigadier-General Clifton Brown) drew attention to its disastrous effects on agriculture. Farms had to be sold, old farmers who had been farming them for years and did not wish to leave had to raise the money, which they could not afford, to buy those farms, and they were left, consequently, with not sufficient capital to run the farm properly and agriculture suffered in consequence. Farm labourers were also put off and servants dispensed with when estates had to be reduced in order to raise the money to pay these death duties. The same disastrous effects are to be seen in business, especially in the case of a small business, because not only has the directing head of it been lost but a large part of the floating capital is required to pay the death duties. People can insure against fire or other calamities, but for the reason I have given it is not practicable to take out an insurance for death duties. We are sometimes told that the State cannot differentiate between forms of saving, but this is not a saving, this is simply the paying of a sum of money each year in order to provide the amount which will have to be paid on death. Any individual who does that ought to be considered a thrifty and wise person, and I submit that what is wise for the individual is equally wise for the State. The Chancellor would benefit by getting immediate payment of the death duties from the insurance company instead of having to allow time for payment.
I would also point out that the Clause does not ask that the whole of the insurance shall be exempt from duty, but simply asks that the value of the estate shall be kept distinct from the insurance money so that the estate pays a lower
scale of duty than it would do if the insurance money were added to the estate. It is such a reasonable proposition that I cannot help thinking that the Financial Secretary to the Treasury, if he is not able to accept it this year, will see that steps will be taken to deal with it in the forthcoming year.

7.1 p.m.

Brigadier-General CLIFTON BROWN: I am sorry I was not here to move the Clause, but it was proposed much better by my hon. Friend in his admirable speech. When this matter was discussed last year, the then Financial Secretary did not, I think, grasp the purpose of this Amendment. He rather answered the larger Amendment preferred by the hon. Member who has just proposed this one. The Financial Secretary said:
The proposal is that insurance moneys, in so far as they are used to pay Estate Duty, shall not be aggregated…"—[OFFICIAL REPORT, 12th June, 1934; col. 1559, Vol. 290.]
My Clause does not go as far as that. As my hon. Friend says, the Chancellor of the Exchequer will find that he has something quite certain. Last year, when the Financial Secretary made out that the difficulty was aggregating estates, and therefore the Treasury would suffer, he made the statement that it might cost as much as £20,000,000. I would like to ask how that sum would be made up if he accepted this much smaller Amendment? At present a great many estates are given away in the lifetime of the owners, and split up into three or four different parts for the various children, and already the Treasury loses by that means an amount of money. Suppose that instead of having to do that—and it is only the rich man who can do it—the rich man could insure his estate and earmark an amount which the Chancellor of the Exchequer would know he would be certain to get. The estate owner would be much less likely to split up his estate in his lifetime, there would be much more income to the Treasury from the bigger amount, and the owner would feel that his children were provided for by his insurance. The Treasury would not lose any more than it does at the present time, if as much.
The argument is not a rich man's argument. The Financial Secretary last year talked about millionaires' estates and the difficulty of aggregating them.
The rich man already gives away his estate in his lifetime and insures himself. It is the poor man who is the chief sufferer, because he is unable to insure or to take any means to provide against estate duties. The small man saves his £300 or £400 and buys a little cottage property and land. When he dies, even if the amount of his estate duty is small, there has not been enough money during his lifetime to provide both against death duties and to keep the property in a proper state of repair. Most of the sums come from these poor men whose property, when sold at their death, is in a worse state than it should be. There is many a working man who would willingly pay £1 or £2 a year into insurance during his lifetime and who would have more incentive than he has at the present time to keep his little property in a state of repair.
We have throughout the country a system of insurance against funeral expenses, old age and everything else, and I cannot see why there should not be insurance against death duties—this penal capital tax which does more harm to the poor farmer and the worker than to the rich man. I believe it would be very much to the advantage of the Treasury and of the country. It is ridiculous to say, as was said last year, that instead of getting £80,000,000 in death duties the Treasury would get only £60,000,000. There would hardly be any difference at all. The psychological effect of these death duties, especially on small people and cottage owners, is such that property deteriorates and real hardship is caused to people we want to encourage, those who have been saving money all their lives and putting their savings into cottages. I hope the Chancellor of the Exchequer will consider some form in which he can help to extend the insurance system we have in so many phases of our national life.

7.10 p.m.

Mr. TINKER: I hope the Chancellor of the Exchequer will give careful consideration before he makes any promise of this kind. Listening to the hon. Gentleman's argument, I was rather surprised to find that this is protection for the comparatively poor man. This is the first time I have heard it argued from that point of view. It has always been to protect the very rich man. I
have followed that line of argument—that the rich man wanted to protect his heirs, and by insurance arrange there would not be such a big demand on the estate. Now the hon. Gentleman has taken another point of view and says that a large number of men who own property desire to insure that at the time of their death their property is kept intact for their heirs. I think I am more in touch with that class of person than hon. Members opposite, and I have never been appealed to by my constituents for this form of protection. Certainly this afternoon has been an education to me, but I am not convinced yet. Therefore I approach the matter from the point of view of protection for the rich man, and that this is something which insurance companies are trying to get through the House. It would be a, great help to insurance companies and I can see, if this is passed, in the next few months insurance companies up and down the country saying what money can be saved by insuring with them. It is surprising that this matter should be brought forward in that light.
I want the Chancellor of the Exchequer on this occasion to stand firm, and not to offer any promise at all, even next year or the year after. As has been mentioned before on several Amendments, we have to have taxation from somewhere, and I have always advocated that death duties are the best means of getting taxation. Sometimes I think it is a misfortune for people to have wealth left to them, and that if they bad to fight their own way they would make better citizens. I remember when death duties were first brought in. It was then thought that everybody would be dividing up their estates and defeating the ends of justice. This may have gone on for a little while, but some of the people who divided up their estates lived a little longer than they expected, and when they applied to their heirs for some of the property back they could not get it. Some of their sons had married and the wives said: "We have got hold of it, and we are going to stick to it. Never mind Father!" Very few people now divide up their fortunes before death. They realise what it means. Once a fortune gets out of their hands they have no chance of getting it back. The Chancellor of the Exchequer need not be afraid if he resists this appeal, and I hope he will give no promise at all.

7.14 p.m.

Mr. SPENS: After the speech we have just heard, I would like to say one or two things. In one sense I am a parent of this Clause. I believe I drafted it in Committee last year, or had some part in the drafting. The persons most hit by death duties are the small people who own small holdings, small property or small businesses and have no liquid resources. When they die their dependants are faced with a claim for £200 death duties. To pay that sum they have to go either to the banks or elsewhere to borrow the money rather than that the home or the business should be sold up. In due course that money has to be repaid, and the hardship on the family at present is very great. One of the greatest forms of assistance we could give to these small people would be to invent some means by which the demand for cash can be met with the least possible hardship. Some system of insurance is desirable for that purpose. I quite agree with the hon. Member that if some such scheme as embodied in this Amendment were adopted, the insurance companies to some extent would benefit, but so also would the people we are trying to help, and that is the point we have in mind. Those with liquid resources can look after themselves and make their own arrangements; it is those who have no liquid resources who require assistance.
The scheme is merely that a person should be allowed to insure for the approximate amount of death duties which they expect their estate will incur, and that, on their death, the small sum of money involved should not be aggregated with the rest of their estate for death duty purposes. In advocating among such small people that they should insure for, say, £500 or £700, one has to point out, if one is honest, that the amount of the insurance will be added to the value of their estate and will put up the rate of death duty which their estate will have to bear. Immediately they are told that the increase in death duties may be from £300 or £400 to £600 or £700, most of them drop the proposition like a hot potato. The suggestion in the proposed new Clause is that people who desire to keep their farm, holding or small business need not have to go to their bankers or to others and borrow for the purpose of paying death duties, and
that if a scheme of this sort were available for them it might be of assistance. Once people have got into the hands of their bankers, or whoever it is, sooner or later the debt has to be paid, and they may have to sell some essential field or part of their farm or business. That sometimes results in the break-up of their particular form of asset a year or two after the death.
I urge the merits of this scheme upon the Chancellor of the Exchequer. There may be objection on the ground of expense, but the Clause is worded so that it shall apply only to insurances taken out in the future for the special purpose of death duties and to the extent to which the money is actually employed in the payment of death duties. Calculations made in the past cannot give us a true basis on which to estimate the effects of such a proposal. I therefore ask the Chancellor to consider such a scheme, and perhaps to confine its application to estates of under £20,000 or £25,000. We could soon see whether it would assist in a great many of those cases.

7.19 p.m.

Mr. COOPER: The hon. Member for Leigh (Mr. Tinker) will be glad to hear that the Government are opposed to the principle of the proposed new Clause, although the reasons for that decision are not precisely those which he gave. The speech of the hon. and learned Member for Ashford (Mr. Spens) will have shown the Committee that the proposal is not designed solely for the benefit of the very rich. A genuine grievance and hardship exists at the present time, and it does not hit only the enormously rich people; but the Clause as drafted is not confined to the small estates. Although the hon. and learned Member did not say that the scheme would apply specifically to the small estates, the scheme would actually apply to all the biggest estates in the Kingdom and the loss of revenue might be enormous. The encouragement to people to insure would be great, and would increase as persons approached nearer to death. The insurance premium would be come of comparatively no importance, but the loss to the revenue might be something like £15,000,000 or £16,000,000. At the present rate of insurance it would, in the present year, be £1,750,000, and that sum would be too big to be considered.
If hon. Members would consider one example, they might see the kind of result the proposed new Clause would have. Consider an estate valued at £1,050,000, which is at present liable to a duty of 40 per cent. If the estate included a policy amounting to £355,000, the obvious effect of the Clause would be to tax the estate as though it were two separate estates, one of £695,000 and one of £355,000. They would come into two different categories. Duty on that estate would amount to £355,000 to the revenue, made up of a duty of 36 per cent. on the larger half of the estate and 30 per cent. on the smaller half, and on that particular estate there would be a loss of duty of £65,000. That is only on one estate, and hon. Members can imagine the gain that persons could achieve by insuring. The practice would become universal. It would be possible for the owner of an estate to take out on the eve of his death a policy for £355,000, and for that amount to be drawn upon his death, at a few days' notice.

Sir W. DAVISON: Does the hon. Gentleman suggest that any insurance company in the world would allow a man to take out a policy for £355,000 in those circumstances, without an enormous premium which nobody would be prepared to pay?

Mr. COOPER: Certainly. Any company would take it on, because there would be a certain gain. Hon. Members seem to forget that, as the law stands, there is a considerable advantage in taking out insurance policies. Life assurance is already the subject of special relief from the standard rate of Income Tax. There is already considerable encouragement, and although the proposed new Clause provides that policies of insurance should expressly state that such insurance was made with the primary object of providing for Estate Duty and it would be perfectly simple to put such a clause into every policy taken out, I cannot see that it would provide any effective safeguard that the policy was to be used for a particular object.
I am not denying that there are hard cases such as those which have been referred to, but I am quite sure that the Clause is not the way to deal with them. Suppose there were two people owning estates of the same size, and one person
found it convenient to take out a large insurance because he had sufficient assets to do so and the other could not afford to do so. Those two estates would be charged Estate Duty on entirely different principles. That is not the right way to deal with the particular problem. I admit that there is a problem, and if the hon. and learned Gentleman and his Friends can think of a better way of dealing with it, I shall be only too glad to examine their proposals. The proposal now before us might result in a tremendous loss; certainly there would be a very considerable loss to the revenue.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment as to assessment on change of office.)

(1) Where a person, on entering upon any office (in this section referred to as a "new office"), ceases to hold any other office (in this section referred to as an "old office") and

(a) but for the provisions of this section the tax payable by him on the emoluments of the said offices would have been computed by reference to the provisions of Sub-sections (4) and (5) of Section forty-five of the Finance Act, 1927; and
(b) his average monthly net emoluments arising from the new office for the first twelve months of his tenure thereof, or for such shorter period as his tenure thereof endures, do not exceed by more than twenty per cent. his average monthly net emoluments arising from the old office for the last twelve months of his tenure thereof, or for such shorter period as his tenure thereof endured; and
(c) the nature of the duties of the old and the new offices respectively was and is such as to require the holder thereof to devote substantially the whole of his time to the performance of those duties;
that person shall, on giving notice as hereinafter provided, be entitled to require that all his emoluments arising from the new office as well as from the old office shall be assessed as if they had arisen from one and the same office, and thereupon any assessment already made shall be adjusted accordingly and any tax overpaid shall be repaid.

(2) A person giving notice under this section shall give it in writing to the surveyor not later than the expiration of the eighteen months next after the end of the year of assessment within which he entered upon the new office.

(3) In this section—

(a) the expression "emoluments" has the same meaning as in Section forty-five of the Finance Act, 1927;
889
(b) the expression "net emoluments" in relation to an office for any period means the emoluments of the office for that period after the deduction of any amount paid or borne for that period by the holder of the office which would be allowable under the provisions of the Income Tax Acts for the purpose of computing an assessment to income Tax under Schedule E;
(c) the expression "office" means an office or an employment the emoluments of which are chargeable wholly under Schedule E.

(4) This section shall apply to any person who entered upon a new office in the year 1933–34 or the year 1934–35 as it applies to persons entering upon a new office in any subsequent year:

Provided that no assessment for any year before the year 1934–35 shall be adjusted under this section.—[Mr. Spens.]

Brought up, and read the First time.

7.25 p.m.

Mr. SPENS: I beg to move, "That the Clause be read a Second time."
The proposed new Clause deals with an Income Tax hardship suffered by holders of offices who have been promoted or transferred during recent years. The holder of an office is assessed upon his salary of the previous year, but pays upon what he expects to earn in the year in which he pays. When the cuts were imposed some years ago, holders of offices had to pay in the first year of the cuts upon their full remuneration of the year before. If they continued to hold the same office until the cuts were restored, they got back, of course, what they lost because there came a year when, on their fully restored incomes, they were assessed on the cut incomes of the year before. A certain number of office holders, however, were promoted or transferred before the cuts were restored, and the result was that for Income Tax purposes they became subject to the present law that from the moment you go into a new office you pay on the salary of that office, whatever it be.
A certain number of office holders, therefore, such as officials in the Civil Service, were penalised in having had an opportunity—or being compelled—to transfer or be promoted. The proposed new Clause suggests that something should be done to meet that class of hardship. The proposal is confined to cases where the salary of the new post does not exceed by more than 20 per cent. the salary of the old post, and where the
duties of the new post are, to all intents and purposes, the same or similar to the duties of the old post. It does not attempt to cover cases where a man has been promoted to an entirely different job or from a salary of, say, £2,000 a year to a salary of £5,000 a year. It provides for the small class of case where a person suffered by transfer or promotion before he had an opportunity of getting the benefit of the restoration of the cuts.
One of the clearest examples is that of a judge who has been promoted to the Court of Appeal, or any of the subordinate judiciary who has been promoted or transferred to what is technically a new post. I cannot imagine that more than about 200 cases will be covered throughout the country, or that it means a great loss to the revenue. A hardship, however, has arisen from the present method of assessing these individuals during the last few years, and I hope that the Chancellor will be able to see his way to accept the Clause.

7.30 p.m.

Mr. CAPORN: In supporting my hon. and learned Friend, I should like to add my appeal to that which he has made to the Chancellor of the Exchequer to give this proposed new Clause his favourable consideration. The reasons for the Clause have been so well stated by my hon. and learned Friend that it is unnecessary to repeat them, but I would remind the Committee that the amount involved to the Treasury must be very small. The persons concerned are spread over the Services, whether the Civil Service, the local government service, or those large statutory companies which have been restoring, along the same lines as the Government, the cuts that were made at a time of depression. Unless some arrangement of this kind is made, many people—perhaps 100 or 200—who are not drawing big salaries, but whose incomes are assessable for Income Tax purposes, will find that what they thought would be promotion beneficial to themselves will, in the first year of their promoted service, entail upon them a loss. I cannot help feeling that that is a state of affairs which the Committee would not desire to see, and, therefore, I hope that my right hon. Friend will be able to accept the Clause.

7.32 p.m.

Mr. CHAMBERLAIN: Some time ago my attention was called to the position
with which those judges found themselves faced who happened to have been promoted to the position of Lords Justices of Appeal. The account that my hon. and learned Friend has given of the position is quite accurate. These judges, if they had remained in their old positions, would have got the benefit of the present Income Tax law, so that while, when their salaries were first cut, they were assessed on their uncut salaries, when the cut was restored they would have been assessed upon their cut salaries instead of upon their uncut salaries, and the second transaction would thus have made up for the first. As a result, however, of their being promoted to a higher position, the salary of which is identical with that of the position they have left, they are, as the law now stands, deprived of the opportunity of having this anomaly made good. That is an inequitable position, and certainly ought to be put right. I should, however, mention to the Committee, that the matter affects, not only one or two judges, but some of His Majesty's Ministers who have changed offices without increase of salary, and no doubt there will be a few cases beyond the Government of public officials, and possibly also local government officials. I think the case is one which in equity ought to be met. My hon. and learned Friend was good enough to submit the form of his Clause to me some little time ago, and it appears to me to be properly drawn. In the circumstances, therefore, I am going to ask the Committee to accept it.

7.34 p.m.

Sir STAFFORD CRIPPS: Clearly, where there is a case of injustice or unfortunate incidence of the law of this sort, which applies only to a very few persons, it is not desirable that any one should oppose the regularisation of the matter in a way which seems to be fair and just to the individuals concerned. We know that there has been a good deal of criticism from His Majesty's judges with regard to the cuts, and perhaps this will assist them in feeling that they are being dealt with justly by the House after all.

Clause added to the Bill.

NEW CLAUSE.—(Rebate on light hydrocarbon oils used for other purposes than road vehicles.)

(1) There shall be allowed from the duties payable on light hydrocarbon oils under Section two of the Finance Act, 1928, as amended by the Finance Act, 1931, and the Finance (No. 2) Act, 1931, a rebate at the rate of sevenpence per gallon on all light oils which are shown to the satisfaction of the Commissioners of Inland Revenue to have been used for any purpose other than as fuel for mechanically-propelled vehicles constructed or adapted for use on roads.

(2) This Section shall be deemed to have had effect as from the eighth day of August, nineteen hundred and thirty-five, and shall have effect notwithstanding the preference granted by the British Hydrocarbon Oils Production Act, 1934, to light hydrocarbon oils manufactured in the United Kingdom from coal, shale, or peat indigenous to the United Kingdom.—[Major Hills.]

Brought up, and read the First time.

7.35 p.m.

Major HILLS: I beg to move, "That the Clause be read a Second time."
If this Clause were carried, it would put the light oils in the same position in which the heavy oils are under the present Budget. Under this Budget, all heavy oils used industrially in Diesel engines, or in any engines that burn heavy oil, are given a rebate of 7d. a gallon off the Customs Duty. The Customs Duty is 8d. per gallon, and, therefore, heavy oils used industrially now bear a duty of 1d. per gallon. If my proposed new Clause were carried, it would put the light oils in the same position. I want first of all to mention to the Committee the industries that would benefit if this concession were made. It would benefit the paint, colour, and varnish industries, the painting and decorating trades, dyers and cleaners, boot and floor polish makers, and wallpaper makers. All of these industries are interested in two special sorts of hydrocarbon oils, namely, white spirit and turpentine. I will give in a, minute a description of the different sorts of light hydrocarbon oils. Other trades which are interested in industrial spirits are the chemical trades, the indiarubber trades, the seed crushers, and, lastly, the bone users.
There are four different grades of light oils to which this Clause would apply. In the first place, "light oils" are defined by the Finance Act, 1928, as having a flash point of less than 22.8 degrees
Centigrade, that is to say, 73 degrees Fahrenheit. That means that at that temperature they give off an inflammable vapour. The first of these oils for which I ask the concession is the article known as white spirit. Its flash point is rather higher than that of petrol. Petrol has a very low flash point; that is to say, at a very low temperature it gives off an inflammable vapour. White spirit stands between petrol and paraffin, its flash point being 73 degrees Fahrenheit or over. It could possibly be used in an internal combustion engine, but it is not adapted for use in the ordinary motor car or lorry.
The second class of light oils to which the Clause would apply are the industrial spirits. These are of different qualities. Most of them are specially produced, and they are not similar to motor spirit, being easily identifiable. They are, however, oils of low flash point, and they could be used in the internal combustion engine. The third article is American turpentine, which is a different thing altogether. White spirit and industrial spirits are mineral oils, while American turpentine is a vegetable product with a high flash point of over 73 degrees Fahrenheit, and no one would think of using it in an internal combustion engine. The fourth class of article to which the Clause would apply is aviation spirit—the spirit that is used in aeroplanes. I do not plead specially for this, but it would come within the ambit of the Clause. As far as the Government Air Service is concerned, I take it that it is all one to the Government whether this spirit is taxed or not, for, if it is taxed, they gain more revenue to the extent of the taxation, while, if there is no tax, they get cheap petrol for the Air Service. I would point out, however, that the object of the Government is to encourage civil aviation, and a rebate of 7d. per gallon on aviation spirit would cost the comparatively small sum of £80,000 a year, which it might be worth the while of the Government to pay. This is especially the case because, as I shall show in a minute, all aviation spirit that is used on foreign flights outside this country is already exempt from duty.
I have stated the scope of the Clause; now a word about the cost. The cost is not light to the big trades of which I
have been speaking, and which would receive a big benefit from the concession. The cost to the Exchequer would also be heavy. I am told that, if the Clause were carried, the cost in a full year would be £897,000, and during the present year, from the 8th August next until the 5th March, 1936, £578,000. Therefore, we are talking of a very substantial loss of revenue. The largest item would be white spirit, which would account for about £467,000, or more than half the total loss of revenue involved. The case that I want to make is shortly this: When the Petrol Duty was imposed in 1928, it was imposed for the purpose of financing de-rating. It was 4d. a gallon in 1928, it was raised to 8d. by the two Budgets of 1931, and it now stands at 8d., the figure of the Customs duty on light oils. I am going to contend that, since heavy oils used industrially and not on the roads are now given a rebate of 7d. per gallon, it is only fair, and it would be a good thing for the country and a great benefit to industry that light oils should be put in the same position. I know the arguments that will be used against me, and, with the permission of the Committee, I will just run through a few of them. The first thing that I shall be told is that, as this is a Customs duty, drawback is given on the export of the article, and no doubt that is true. If the article is exported intact, a drawback to the amount of the whole of the duty is given, but it is very cumbersome to get that drawback, and the drawback is not given when the identity of the article is lost. Take the case of the paint and varnish trade, which is a very big trade. If an article that contains paint or varnish is exported no rebate is given. As soon as the identity of the article is lost, no drawback is given. So much for that objection to the Clause.
The second objection is that when the tax was imposed in 1928 it was for the purpose of financing de-rating. It will be said that it was not intended to confine that tax to petrol used on roads; that it was not intended that that tax should be only a tax on locomotion. It will be said that it was to be a general tax upon the use of all spirit, light or heavy, and that it was imposed for the purpose of financing de-rating. A large part of that argument disappeared when the tax was increased, first of all, to 6d. a gallon, and then to 8d. a gallon in 1931.
A large part was taken away then, but the whole basis of the tax was taken away when the heavy oils used for industrial purposes were given a rebate of 7d. a gallon, while the same heavy oils used on the roads still continues subject to the Customs Duty of 8d. a gallon. Surely the Chancellor of the Exchequer cannot now say that the tax was imposed for the purpose of de-rating, for the heavy oils were just as much taxed at that time for de-rating purposes, and yet for very obvious and good reasons the industrially used heavy oils are not subject to that tax. It is equally good for the country to help the industries concerned by a similar rebate of the Customs Duty on the light oils. So much for the first two objections to be raised against the Clause.
I come to a very important point. I have no doubt that the Chancellor of the Exchequer may think—and he may have grounds for thinking—that if he exempts certain light oils, it will be very hard to prevent those light oils being used in motor cars, therefore escaping an important and proper duty. I agree that unless I can show him that evasion will not take place, I cannot justify my Clause. I hope, however, that I can show him that evasion can be avoided. The same difficulty to exactly the same extent arises on the heavy oils. You have a totally different duty upon the heavy oil that is used on the roads from that upon heavy oil used in industry, and you have an elaborate scheme under the present Finance Act under which powers are taken to discriminate between the two. I submit with great force that if you can escape evasion in one case you can escape evasion in the other. I am convinced that the scientific experts at the Treasury can produce a scheme which would prevent evasion. I would point out that in 1928 the tax of 4d. a gallon extended to all light hydrocarbon oils and paraffin, and at once there was a great outcry that the paraffin tax affected the poor very heavily, and a strong claim was made for the remission of the tax. At first that seemed to be impossible, but when the scientific experts of the Treasury got to work, it was found that it was possible, and a formula was arrived at. Paraffin escaped the duty, and what was done for paraffin can be done for these light hydrocarbon oils. Hydrocarbon
oils are all made by licensed refiners. They refine under licence, and I am told that they would assist the Treasury. Since they are licensed, it is an assistance for which the Treasury can ask and upon which, I believe, the Treasury should rely. Consumers would receive only under licence, and all consumers are willing to submit to any conditions. The supply would be under licence from the supplier, and the consumer could not receive his requirements except under licence.
May I pray in aid the case of industrial alcohol? Industrial alcohol is free from duty. The duty upon alcohol is something like 100 times the duty on light hydrocarbon oils. Is there evasion there? I do not believe that there is, and I believe that the same sort of thing could take place with regard to hydrocarbon oils. Germany, the United States and Ireland all tax petrol used in motor cars, and yet find it possible to exempt light hydrocarbon oils used in industry. I am told that discrimination and avoidance of evasion is easier in the case of heavy oils than in the case of light oils. Already you have a large degree of discrimination. Motor spirit for aeroplanes on foreign flights is free, and for aeroplanes on home flights is taxed 8d. a gallon. Is there evasion there or a fraud on the Revenue? There is a case where the same article is taxed at different rates, and yet I do not believe that there is any fraud on the Revenue. Fishing boats and coastal vessels get their oil free, and vessels that are ocean-going do not get it free. Is there evasion there? If there is not, if I can show that at present you can discriminate and can be sure that the oil which gets a rebate of Customs duty is not used wrongfully for other purposes, I think that I shall have made a great part of my case for the exemption of hydrocarbon oils.
I will end on two points. The British Hydrocarbon Oils Production Act, 1934, gave a preference of 4d. a gallon upon all oils made from coal, or shale or peat. At present, since there is no Customs duty on those articles and no Excise duty, those substances escape duties. They are absolutely free. I mention that for this reason. I do not want it to be said by the Chancellor of the Exchequer that I am asking for a Customs rebate which implies that the article that comes
in is a foreign article and that thereby we shall be giving a cheaper article to the trade than can be produced at home. I do not indeed do that, because under this Clause the duty would remain at a 1d. a gallon on the foreign article. The home-produced article is free now, and there is also the assurance under that Act that, if ever a Customs duty is imposed, the preference on home-produced oils from coal, shale or peat shall never be less than 4d. a gallon. I am told that the home production can supply some products required, and I should like to think that it could, but it cannot produce the white spirit which the trade wants. It cannot produce it, for a very simple reason. No one yet has found any way of getting rid of the smell. Oil produced from coal, or shale or peat has a very strong smell, and that makes it quite impossible for distillation into white spirit, even if that were a commercial proposition. Turpentine, another of the substances for which I make a plea, is a vegetable oil. It is quite a different matter altogether from mineral oil and cannot be distilled from coal, or shale or peat.
I admit that to ask for a remission of something approaching nearly £900,000 a year is a very serious thing, but I do so because I believe that whatever is given in remission of taxation will go to the encouragement of trade. The Chancellor of the Exchequer has shown by his rebate of 7d. a gallon on heavy oils used in industry that he wants to help industry. I am certain that he does, but cannot he go a step further and help it here? I know that I am asking for a big thing, but the trade of the country is also a very big thing, and the Chancellor of the Exchequer has shown on many occasions that he does not merely regard himself as a collector of revenue, but that trade is very near to his heart. Here we have the case of industries which are severely hit. The drawback which is spoken about so much does not apply to the home trade. All the home-sold products have to pay the whole of the duty. The petrol tax was imposed to finance de-rating, but it has gone a long way beyond that. Even if it were possible to say that the tax was imposed not only on the users of motor cars but on industry, the effect of it on the trades for which I plead is far heavier. I am told that in the paint and varnish trade four times more is paid
in this tax than is obtained in relief under de-rating. For these reasons, I plead very strongly on behalf of many hon. Members of this House who speak for many industries up and down the country, for the consideration of my Clause. If the Chancellor of the Exchequer cannot go the whole way, will he not go part of the way? Cannot he do something to help us? It is a very real demand which is felt in many parts of the country, and I hope that I have not pleaded in vain.

8.0 p.m.

Mr. HANNON: It is difficult to add anything to the comprehensive statement that my right hon. Friend has submitted, but I should like to summarise some of the leading industries which are affected by this tax. A whole series of enterprises, all affording considerable employment are interested in this proposal and, as the Chancellor of the Exchequer himself knows, and indeed has said in some of his speeches in the House, the demand for the removal of the taxe deserves sympathetic consideration in the interests of the industry. There are not fewer than 10 different branches of trade which are intimately concerned for their future progress and prosperity on the repeal of the tax. In making this appeal, my right hon. Friend and I are supported by the National Association of Paint, Colour and Varnish Manufacturers. It may be said that this branch of industry is at present in a fairly flourishing condition, but the point is how much more flourishing it would be if relieved of the incubus of this tax.
There is the National Federation of Painters and Decorators of England and Wales, who are considerable employers of labour, and the National Federation of Dyers and Cleaners. In the dying and cleaning industry the use of light oils is of considerable consequence to the success of their work. Then we have the Association of British Chemical Manufacturers, the Indian Rubber Manufacturers Association, the Boot and Floor Polish Manufacturers Association and the wallpaper manufacturers. I am sure the hon. and learned Gentleman opposite, who is always so interested in anything affecting the decorative side of political life, will at once appreciate the importance of some consideration for the Wallpaper Manufacturers Association. There are
several other bodies, each in its respective way making a substantial contributions to the industrial life of the nation, which have joined in the plea to the Chancellor that this tax should undergo some modification.
In all the Debates that we have had in years gone by on this tax there were always two questions brought forward as to the difficulty of making any change. The first was the provision of machinery at the instance of the Treasury for the collection of the tax. Surely the Treasury has had in the past to adopt various devices for the collection of taxes and has never been found wanting, and in this case it ought to be able to make arrangements in favour of the industries that make this appeal. The second is the question of evasion. The Government have had considerable experience in dealing with evasion and full powers have been granted under this Bill which can be expanded to cover light oils. This is a case in which, if my right hon. Friend cannot go the whole way, he can at all events go some distance to meet the difficulties in which so many industries find themselves and give them some measure of relief. This is a practical proposal in the interest of industry to which the Chancellor has during his whole life given so much thought and constructive energy and purpose.

8.6 p.m.

Mr. ROSS TAYLOR: When my right hon. and gallant Friend the Member for Ripon (Major Hills) gave a list of the industries which would benefit if this Clause were accepted, there was one that he did not mention. My constituency is almost exclusively agricultural, but there is in it a factory which, with its complement in London, is the only one of its kind not only in this country but in the British Empire. It is run by the British Xylonite Company and in it xylonite, or celluloid, to call it by its more usual name, is manufactured. I believe it is the only factory in the Empire which makes celluloid from beginning to end. For the manufacture of celluloid camphor is a necessity. Camphor is also used for medicinal purposes, and, I believe, for religious rites in India. Camphor in commerce occurs in two kinds. First of all, there is natural camphor, which comes from a tree that grows in Japan and Formosa. That source of supply is the monopoly of the
Japanese Government, and, owing to the very great increase in the manufacture of celluloid in Japan, that source of supply is diminishing very quickly, and Japan is a very serious competitor of the celluloid trade in this country.
The other kind of camphor is manufactured by a commercial process from oil of turpentine. It is commonly called synethic camphor, but I understand that the process is not synthesis and the adjective is not correct. This manufactured camphor was first produced in Germany in 1904. Its manufacture was tried in this country in 1910 and 1911 but was abandoned. After the War there was intensive research by the British Xylonite Company, and in 1926 they put up this factory. It cost them something like £100,000, and at that factory they make less than half the camphor that is required for their celluloid making purposes. Camphor can only be made commercially from oil of turpentine, which is a light hydrocarbon oil and is, therefore, subject to duty. That means that the cost of British camphor is increased by 10 per cent. The largest producer of this manufactured chemical is Germany, but it is also made in the United States and in Italy, and these three countries are the biggest manufacturers of celluloid. Oil of turpentine being subject, to a duty, these other countries have an advantage over the home producer, Japan because of her natural supply, and the United States, Germany and Italy because they have this supply of duty-free turpentine. If this Clause is accepted, this advantage will to a very great extent be removed, and the home producer will be placed in a position more or less of equality with his competitors. There is a special case for the Chancellor's consideration here. In the first place, the manufacture is unique. It is a very special process, and it employs a number of men. In the second place, there would be no administrative or practical difficulty in supervising and safeguarding the use of oil of turpentine in the manufacture of camphor. Alcohol is used duty free in industry, and it happens that in this factory where the camphor is manufactured they use industrial spirit, and the same people who supervise the use of that spirit could supervise the use of turpentine for the manufacture of camphor.
When we come to consider the question of the revenue involved, the argument
for the reduction of the duty is much stronger. Of the total amount of revenue raised by the hydrocarbon oil duty in 1933, the amount contributed by oil of turpentine used for the making of camphor was only.008 per cent. That is in value something under £3,000, and, if the whole of the requirements of the British Empire were met in this country from duty-free oil of turpentine, the loss to the revenue would be somewhere in the neighbourhood of £10,000, which is, of course, a mere bagatelle compared with the revenue which the Treasury foregoes on alcohol supplied duty free to British manufacturers. At present it is cheaper for this company to buy camphor from Germany rather than manufacture it here, though it continues the process because it does not want to lose the use of the process. Without the duty on turpentine it could supply the whole of the requirements of camphor for the British Empire which would, of course, give additional employment and encourage a home industry. I hope the Chancellor will give this his favourable consideration.

8.13 p.m.

Sir HERBERT SAMUEL: If I detain the Committee for a few moments on this question, it is because in my constituency there is a, large manufacture of wallpaper, and also of paint and varnish. My constituents feel that they have a very real grievance in the matter, and it is because I share their view that the present taxation imposes undue hardship that I am pleading their cause to-day. The trades directly affected by this taxation of light oils used in industry employ from 400,000 to 500,000 people, so the question is one of considerable national importance. The tax is one upon a raw material of industry, and is, therefore, wrong in principle. There is no student of public finance but will agree that a State which imposes upon the raw materials of its industry a tax for revenue purposes is doing a foolish thing. Every writer on public finance would condemn any form of taxation on raw material, and, when there is a tax upon raw materials, the burden of proof lies on those who defend it rather than on those who attack and criticise it. This tax upon oil was largely imposed in order to provide revenue to meet the cost of the de-rating of industry, and it was represented,
truly, that it was an immense advantage to British industry that manufacturers should no longer be subjected to a heavy burden of rates upon their premises. A tax upon raw materials is also a tax upon industrial processes. So far as the paint and varnish manufacturers are concerned, for every pound they get in advantage from the de-rating of theeir premises they lose £4 through the tax which they have to pay on oil. Consequently, every argument that may have been used in the case of this industry to justify and applaud the de-rating of industries is really an argument which would condemn the continuance of a tax which has a fourfold disadvantage for the sake of the advantage which they gained.
The matter can be summed up in a few words to make it perfectly clear to every hon. Member who has not familiarised himself closely with the facts of the case. Both light and heavy oils are used for transport and for industry. The two classes of oils are used for the two purposes. Heavy oil is taxed for transport 8d. a gallon, and will now be taxed for industry 1d. a gallon. Light oil is taxed for transport 8d. a gallon, and will now be taxed for industry also 8d. a gallon. That is the whole matter in a nutshell. Heavy oil in this Budget will for the first time be taxed only 1d. for industry and 8d. for transport, but light oil will still be paying 8d. for industry because it is paying 8d. for transport.
It is said that this is necessary in order to avoid evasion. I remember that for many years a controversy went on in this House and in the country with regard to the taxation of industrial alcohol. Our industries, especially the chemical industry, complained that they were prejudiced very greatly in their competition with the industries of Germany and other countries because alcohol was taxed for industrial purposes but not taxed in the competing countries. The late Lord Haldane took up the matter with great energy and again and again brought the matter before the House. We were always told that the concession could not be made because the taxation of alcohol was an important item of revenue, and that it was impossible to free industrial alcohol from taxation without running the risk of grave evasion. Therefore, year after year, this reform was refused
on the advice of the experts of the Treasury and the Board of Inland Revenue. At last a Government came into office in which Lord Haldane took a, leading part. He used his influence as a Member of the Cabinet to secure the concession that industrial alcohol should be free from taxation. That was done, and it was found that the threatened evasion did not take place, and, so far as I know, no detriment has been caused to the revenue from alcohol used for drinking purposes through the freeing from taxation of industrial alcohol.
With regard to petrol, while it is taxed for industrial purposes in this country, I am informed—my information comes entirely from the trades concerned and there may be an answer—that in Germany, the United States, in Ireland and other countries exactly what we are pleading for is in fact done, and that while petrol is taxed as in this country if it is used for transport, it is not taxed when it is used for industry. Therefore, the difficulties of evasion have apparently been overcome in other countries. We well know that Britain is subject to extreme competition with industries all over the world, particularly by such countries as Germany and the United States, and we ask why our manufacturers should be handicapped in this way while competing manufacturers in other countries are not so handicapped. What is the reason? Can it be justified that British industry, fighting as it is almost for its life and fighting for the prosperity of this country in competition with all the countries of the world, should so far as these processes are concerned be subject to heavy taxation while their competitors are not so taxed? Although in the other countries petrol used for transport purposes is taxed it is found possible that for industrial purposes it need not be taxed. That is the clear case which we wish to place before the Committee and the Government. It seems to me to rest on incontrovertible argument, and I shall await with great interest the reply of the Chancellor of the Exchequer.

8.21 p.m.

Mr. CLEARY: I rise to say a few words on this subject primarily because it is a question of great concern to many firms in the city of Liverpool. The
interests represented in the very long list read by the right hon. and gallant Member for Ripon (Major Hills) includes firms operating in depressed areas like Liverpool, who are endeavouring to carry on under adverse conditions. I have in mind the workpeople as well as the employers. The concession that is asked for would be an encouragement to the industries represented by those firms, and would be an incentive to them. Any morsel that can be thrown out by the Treasury to the depressed areas and to the firms who are remaining true to the northern parts of the country are to be welcomed by the Members of Parliament who come from those constituencies. Not only would this concession be a help to firms operating under such conditions but it would, I am informed, obviate what may happen, and that is a reducwhich depend more or less upon the tion of the very large establishments prosperity of these undertakings in the city of Liverpool and elsewhere. It is for these reasons, and not that I pose as an expert or as one who has any technical knowledge on this matter, that I support the plea for this concession. I support it on behalf of the interests in my own city and in my own constituency. I deem it to be my duty on behalf of those interests and in the interests of the thousands of workpeople affected to do anything that I can, even by merely rising to say a few words in this Debate.

8.23 p.m.

Miss GRAVES: Many facts have been put before the Committee which it would be unnecessary to repeat. May I add a few words from a particular angle. Last week, thanks perhaps to the most farsighted financial policy of this generation, the Chancellor of the Exchequer was able to hold out a helping hand for the development of transport in London. In regard to the matter that we are discussing to-night I suggest that the moment may have come for a similar helping hand to be held out. An industry in my constituency which is vitally concerned in the results of this discussion is that of paint and varnish. Perhaps I may be allowed to point out that the use of white spirit and turpentine in paint and varnish, as also certain distillates in the manufacture of rubber, is an essential without an alternative. No paint can be produced without white spirit and turpentine.
Paint, as the Committee knows, consists of a pigment and an oil medium, usually linseed, but neither of these two can form paint for commercial purposes without the addition of what are known as thinners, and the thinners are white spirit and turpentine. No pot of paint or varnish can be sold without the addition of white spirit or of vegetable hydrocarbon oil of turpentine. In the case of the rubber industry certain distillates with a flash point below 73 degrees Fahrenheit are equally essential.
If the Chancellor of the Exchequer were able to hold out his hand at this juncture to the paint and varnish industry in the way suggested, and I speak also of the indiarubber industry, it would be an immense gain in regard to employment in the East End of London, where employment is very hard to come by. In venturing to point out that these light hydrocarbon oils are essential to the commercial products I have described, I hope that I may have sufficiently endorsed all that has been so well said by other hon. Members.

8.26 p.m.

Brigadier-General NATION: I desire to support the case presented by the right hon. and gallant Member for Ripon (Major Hills) and other hon. Members who have addressed the Committee. The constituency I represent is very interested in this duty on light hydrocarbon oils. Nearly all the industries which have been mentioned are found in my constituency. Last week I said a few words with regard to the new duty on soya beans in connection with the seed-crushing industry. There is much to be said on the seed-crushing industry considered in respect to the duty on light hydrocarbon oils. It is vitally affected; and, if the duty is maintained, and also that on soya beans, the inevitable result will be an increase in the price of cattle food in this country. I also want to deal with the varnish and paint industry. I have a number of factories in my constituency which are deeply connected with this industry. The amount of hydrocarbon oils which are distilled in this country from raw materials obtained from abroad is very large in a full year. The object of the Import Duties when they were first introduced was to support manufactures in this country and not to inflict hardship
on those who obtain their raw materials from abroad. But this is a Revenue Duty on manufactured articles in this country.
I doubt whether the Chancellor of the Exchequer could mention any other manufactured articles in this country which are taxed to the same extent as white spirit. The actual cost of white spirit in this country is 6d. per gallon, and the duty on white spirit is 8d., more than double the value of the article. It is sometimes said why use white spirit; why not distil it? It has properties similar to those of white spirit. In the case of paint and varnish, I can assure hon. Members that white spirit has properties which the other has not, and that the other cannot be used as an alternative. White spirit has drying qualities which are specially required, and distilled spirit is no good for that purpose. When the duty was first introduced it was on account of the bad financial position of the country. Revenue had to be obtained from all possible sources. Fortunately, we are no longer in that position, thanks entirely to the efforts of the Chancellor of the Exchequer, and now when the country is definitely on a secure financial basis the time has come, I think, when this duty, which was then described as an iniquitous duty on industry, should be removed and some relief given in order to encourage one of the chief industries of this country, the seed-crushing industry. I hope that the Chancellor of the Exchequer before the Report stage will give some consideration to this matter. I give my wholehearted support to the suggestion that there should be some reduction on the duty.

8.31 p.m.

Mr. SIMMONDS: I desire to associate myself with my hon. Friends who have put this plea so forcibly to the Chancellor of the Exchequer. It would be presumptuous for me as a junior Member for the city of Birmingham to endeavour to tell the Chancellor anything of the needs of industry in his great city. But Birmingham is a microcosm of the industries of the whole country; almost every industry is represented there. Therefore, when he hears pleas from hon. Members representing constituencies from the four winds, I hope he will bear in mind that this plea can be put forward on behalf of the many industries in the
city of Birmingham. I do not propose to proceed further on the general lines. I want to express my regret, like some of my hon. Friends, that it was not possible for the Chair to alight on another Amendment with reference particularly to the duty on light fuels for civil aircraft. The Chancellor of the Exchequer may possible feel that this is becoming a perennial plant, but at the moment Governments both here and elsewhere are giving more heed to the question of aircraft, civil and military, than ever before; and it may not, therefore, be a bad opportunity to put certain points before the right hon. Gentleman which may have escaped his notice.
In the past I have heard hon. Members chiefly complain that aircraft were paying this tax on petrol in order that the money might be used for the Road Fund. I understand that the Chancellor of the Exchequer knows no intimate connection between the Petrol Duty and the Road Fund. Although there may not be for accountancy purposes, yet there is a great and historical connection, but we are proposing entirely to drop that particular issue in our plea to-night. If it is necessary to have a precedent in this connection, there is obviously the prcedent of heavy oils. An aircraft flying with a Diesel engine pays a duty at the low rate of 1d. per gallon; an aircraft flying with petrol pays a duty at eight times that rate. If it be said that these duties are for certain services granted to aircraft operators or owners, that plea clearly fails because in one case the owner of the petrol-driven aircraft pays eight times that which the owner of the aircraft with the Diesel engine is required to pay. I do not think that the Government can in fairness to aviation and their responsibilities to the country burke this question. They can support or ignore or cripple civil aviation.
During the last few years this tax has been crippling civil aviation in this country. The Committee may like to know to what extent that has been true. I have obtained figures carefully worked out, which show that were the Chancellor to remove this tax on petrol for civil aircraft it would reduce the operational costs, that is the cost of fuel, oil and the maintenance of the engine and other parts of the aircraft, by no less
than 25 per cent. That is a very extraordinary figure, and it does show that if the Government desire to encourage civil aviation for whatever purpose—I could suggest several reasons why they should support civil aviation—there surely is a very good reason. But actually history is repeating itself in this matter. I would like my right hon. Friend the Chancellor, who has recently paid heed to this very question in connection with the motor car, to bear this point in mind with regard to civil aircraft. We have lost, if we ever had, the market in high-powered cars to America. My right hon. Friend in his wisdom and with the applause of every Member of this Committee agreed to reduce the horse-power tax in order to encourage higher horse powers and permit us to compete more favourably in foreign markets.
Precisely the same thing is occurring in civil aviation. America, without this tax on petrol, with petrol at a low price, it putting more horse power into her civil aircraft than we have thought it wise or possible to do. An example of that is to be found in the famous Douglas and Boeing type of aircraft. The Americans have thus in production these high-speed aircraft, running with greater engines than our own, largely because in this country we are starving our aircraft for power on account of the economic conditions which reign. If it is serious to starve motor-cars for power, for political reasons, it is even more serious to starve the civil air liner, because aircraft can only operate in many parts of the world where the aerodromes are high above sea level, if they have a considerable margin of power. For that very reason British aircraft are not to-day competent to compete in many markets of the world, and as a result the orders inevitably go to America. It may be said that the Chancellor could not be expected to give a rebate to aircraft, that it would be difficult of collection. I myself do not think that that is true. But if he could not give us this concession directly could be not give it to us indirectly? Could he not encourage the Government, by means of some airways board or some other corporate body, to organise the airways of this country? At the moment they are completely lacking in organisation. They are equipped completely neither for day flying nor for
night flying. It has been suggested by the London Chamber of Commerce, the Federation of British Industries and others that this might well be a way in which he could utilise this tax. I have heard the Chancellor say in previous years, when we have put our plea to him on this subject, that this is not the place to encourage civil aviation; but I would suggest that as this stage it is in every way the place to encourage civil aviation, which needs encouragement because it is the veritable cement of Empire in this age. It needs encouragement because—

The TEMPORARY CHAIRMAN, (Mr. G. Macdonald): I have allowed the hon. Member every latitude, but I must now call him to order.

Mr. SIMMONDS: I bow to your Ruling, but you will well understand that after my disappointment at a certain oversight I may have stepped rather far to the side. But I do submit that this plea can fall in very well with the whole policy of the Government on the Service side to increase our Air Estimates in order that we may be in a better position to exercise our functions in the new world of collective security. If, therefore, the Chancellor can see his way clear to assist civil aircraft by reducing the tax on petrol, he will be doing a far-reaching thing both for this country and for the Empire.

8.43 p.m.

Mr. CHAMBERLAIN: Everyone who heard my right hon. Friend who moved this new Clause must have been grateful to him for the care which he had given to the preparation of his case, and for the very exhaustive and persuasive way in which he put it before the Committee. He went so far as to supply the arguments which might be adduced against his proposal. In fact, I am not sure that I can improve on them. He did not attempt to minimise the fact that the proposal he was making was one which would put a severe strain on my financial arrangements. I must say that when a case is put like that it does in advance make one feel inclined to bestow all the favourable consideration possible upon it, and, if on this occasion I am not able to accept my right hon. Friend's Clause, I hope to show him that it is for reasons which I think are overwhelming. I must begin by putting a minor point, but one to
which I must call attention. In this new Clause there are two Sub-sections, and the second Sub-section says:
and shall have effect notwithstanding the preference granted by the British Hydrocarbon Oils Production Act, 1934, to light hydrocarbon oils manufactured in the United Kingdom ….
I must call the attention of the Committee to the circumstances in which that Act was passed. It may be remembered that very prolonged negotiations were carried on with firms who ultimately embarked upon the hydrogenation process for the production of oil from coal. They only entered upon that undertaking because of an undertaking given by the Government that for a period of 10 years the preference extended to the home-produced oil would be not less than 4d. a gallon. As there is no Excise duty, if you are going to reduce the Customs duty to one penny, obviously you are transgressing the undertaking that was given that the preference should not, for this period of time, be less than 4d. and although this was an undertaking given by the Government at the time only so far as a Government can bind its successors, it would be impossible obviously for the Government themselves to consent to what I think would be fairly represented as breach of faith. For that reason alone it would be impossible to accept the Clause.
Even if that were not so, there are other and substantial reasons why I should have great difficulty in accepting my right hon. Friend's proposal. He said very truly that the tax upon these light oils was not, in its inception, applicable to transport. It was a general tax. It was a tax upon light hydrocarbon oils as such and no doubt it was, in the first instance, imposed in order to finance the de-rating proposals of my right hon. Friend the Member for Epping (Mr. Churchill). My right hon. Friend said the basis of the tax had been destroyed when the tax was raised, by which, I presume, he means that it could not longer be said that this tax was purely for the purpose of meeting the cost of de-rating. I am quite ready to concede that point. On the other hand, the tax was raised because more revenue was required and this was considered to be the most convenient way of supplying that increased revenue by the Chancellor of the Exchequer at the time. To-day the petrol revenue which is in the neighbourhood of
£40,000,000 is a very substantial buttress and one which it would be extremely dangerous to undermine or interfere with very seriously.
We have had proposals of this sort before us from time to time in the past, and it has always been the practice of the Chancellor of the Exchequer to resist such proposals on the ground that he could not consent, in principle, to exemption by use. That is, that where you have an article used for one purpose, which is indistinguishable from an article used for another purpose, you must not attempt to say that that article is to be taxable when used for the one purpose but not taxable when it is used for another purpose. I think that has been the principal argument used against proposals of this kind—the meaning of it being that when you attempt to make such a distinction and to say that an article is to be taxable or not taxable according to the way in which it is used, you are at once opening up a great temptation to people to say that they are going to use it for the purpose for which it is not taxable and then to use it for the purpose for which it is taxable. The question arises whether it is possible to devise machinery by which you can control evasion of this kind. The Customs Board have always held that it was not possible, or at any rate that they could not themselves devise any way of satisfactorily controlling evasion of that kind in the case of these light hydrocarbon oils. I think, on the whole, that argument is the one which has been accepted by the House of Commons in the past and which has induced them to refuse proposals of this kind even when those proposals have been moved so convincingly as my right hon. Friend moved this new Clause this afternoon.
A new argument has been given to my right hon. Friend by the fact that we have made a breach in this principle of not allowing exemption by use and that in fact in the case of the heavy oils we are going to make such a distinction. My right hon. Friend says, and in this he was supported by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) and others, that it is inconsistent to have one argument in the case of the heavy oils and another in the case of the light oils and that the light oils should be placed in the same position as the heavy oils. On the face of it, that proposition
does, I must say, sound plausible and even convincing, but the analogy is not as close as might at first sight appear to be the case. You cannot as a matter of fact put light oils in the same position as heavy oils for this simple reason, that in the case of the light oils 5 per cent. only is used for non-road purposes and 95 per cent. for road purposes whereas in the case of the heavy oils the position is almost exactly the reverse. In that case, 94 per cent. is used for non-road purposes and only 6 per cent. for road purposes.
I do not like this exemption by use in the case of heavy oils and if one could only find some way of defining heavy oils used for non-road purposes that would make them distinguishable from those used for road purposes, I should much prefer that to the arrangement which we have. Nevertheless it is a fact that you can concentrate your whole attention upon this very small proportion of the heavy oils which is going to be used for road purposes. It is only 6 per cent. of the whole and we do think that it is possible for us to keep effective control in regard to it. On the other hand, when you consider that of the light oils 95 per cent. is used on the roads it seems practically impossible so to exercise control over the enormous number of small car-owners and commercial users, who would have this temptation put in their way, as to be sure that there was no serious evasion of the tax. It is no use for the right hon. Gentleman the Member for Darwen to say that they do this in America or Germany. I have not information and he evidently has not information as to the results. We have no idea as to whether there is evasion in those countries. It may be that the amount of revenue there is trifling, compared with the revenue which we derive here. You cannot argue from one country to another without a great deal more detailed information than is in our possession.
As to the case of industrial alcohol which the right hon. Gentleman has also brought up in support of his contention, that all happened a very long time ago. I do not know whether my recollection is any better than the right hon. Gentleman's of the circumstances in which it was alleged that it was impossible to find a differential definition of alcohol used for industrial purposes and alcohol otherwise used. But I do know this, that the
exemption which he ascribed to the fact that Lord Haldane who had been interested in the subject but had always met with opposition on the part of the authorities at last came into office and was in a position to exercise his opinion in favour of the alteration—I do know that the alteration took place four years before Lord Haldane came into office at all.

Sir H. SAMUEL: My recollection was wrong there, but Lord Haldane led the agitation for it.

Mr. CHAMBERLAIN: I do not think one can go back so long ago as to that precedent without a good deal more information than we have before us at the present time. These various oils, with one exception, are really all usable as motor fuel, as my right hon. Friend himself candidly admitted. They are therefore capable of use, and in fact some of them are now used, in combination with petrol in various kinds of fuel. The one exception is the case of turpentine, which was made the subject of a plea for special relief by my hon. Friend the Member for the Woodbridge Division (Mr. Ross Taylor). Turpentine is not capable of being used as a fuel, and to that extent therefore there would be less temptation in the case of turpentine than in the case of the other kinds of spirit; but it is to be remembered that turpentine is a competitor with white spirit, and it seems to me that it is extremely difficult to tax white spirit and not to tax turpentine.
We have had very sincere and earnest pleas on behalf of various industries which are said to be severely handicapped by the continuance of this tax. I have had the curiosity to look up and see what has happened to these unfortunate industries that are fighting for their lives, as the right hon. Member for Darwen said, against foreign competition, and it was with a sense of relief that I found that the 10 companies which I took which were engaged as manufacturers of paint and varnish last year, made £128,800 more profit than they did the year before, whilst the wallpaper manufacturers increased their profits last year as compared with the year before by 14 per cent.—14 per cent. in one year. That is not so very bad, and although I am sure these pleas are put forward in all good faith, I feel that, in view of those figures, we need not feel that the situation is
desperate and that if they have to go even a little bit longer without the relief for which they are pleading, these companies may possibly still survive.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Reduction of Estate Duty.)

Where a younger person is, under Section one hundred and eighty-four of the Law of Property Act, 1925, deemed to have survived an elder person, and the Commissioners of Inland Revenue are satisfied that Estate Duty has become payable on any property passing on the death (occurring after the passing of this Act) of each such person, then the amount of Estate Duty payable on the death of such younger person in respect of such property shall be reduced by fifty per ceent.—[Sir J. Withers.]

Brought up, and read the First time.

8.59 p.m.

Sir JOHN WITHERS: I beg to move, "That the Clause be read a Second time."
This sounds to be a dry legal proposition, but it deals with a real case of hardship. The Law of Property Act, 1925, Section 184, mentioned in the new Clause, provides that if two persons die together, the younger person is presumed to have survived the older. That is to say, if you take the case of a father and son who were killed in a motor or an aeroplane accident, and the father left his property to his son, and the son left his property to his wife and children, then the son is presumed to have survived the father, and duty is payable on the father's whole estate and on the son's whole estate as well. This Clause is meant to provide that in such a case Estate Duty on the estate of the younger person shall be reduced to 50 per cent. of the whole, so that the Government would receive Estate Duty on the father's whole estate and 50 per cent. on the son's estate, which, I think the Committee will agree, is a very fair arrangement, considering that there is no real succession whatsoever. The son does not succeed; he never really survives. They are killed at the same time, and the son's survival is merely a legal hypothesis.
The principle is admitted that in the case of people dying near together in point of time there shall be a reduction in the Estate Duty, and Section 15 of the Finance Act, 1914, states that where the second death occurs within one year, 50 per cent. is payable, but only in the
case of land and businesses. This Clause is meant to extend that provision in one way and to reduce it in another. It is meant to extend it in the sense that 50 per cent. only is to be payable in the case of the son, but it seeks to extend it in another case. The Section to which I have referred, in the Finance Act of 1914, limits the exemption to money invested in land or business. I want in this new Clause to do away with that limitation and to say that in the case of two people dying together, and the same property paying Estate Duty on both occasions, 50 per cent. only would be payable in the case of the son's estate, but it would be payable in respect of all the estate, whether land or otherwise.
I hope I have made that point fairly clear to the Committee. It is a case of great hardship very often to the wife of the younger person dying, and I urge the Chancellor of the Exchequer, if he possibly can, to accept this Clause, and if not this year, at any rate to give it his careful consideration in order that it may be done another time. There are not many people as a rule dying together, but where it does occur, there is a real hardship involved.

9.3 p.m.

Mr. ALBERY: I wish to say two words in support of the new Clause, which, it seems to me, deals with a real hardship. As far as I can see, one has to realise the fact that the property never actually passes into the possession of the second party who is called upon to pay duty as the law stands, and I hope the Chancellor will accept the Clause.

9.4 p.m.

Mr. CHAMBERLAIN: I must confess that I am really puzzled at this Clause, because those who followed my hon. Friend will appreciate that in the case he contemplated, the case of an accident in which father and son are killed together, he wishes to give a relief in the estate duty, but, as he pointed out, that relief is already given by Section 15 of the Finance Act, 1914, and the Section in question is known as the "quick succession" provision. I will not read the whole of it, but it provides that the relief, where the second death occurs within one year of the first death, is to be 50 per cent.; where it occurs within two years, it is to be 40 per cent.; within three years
it is to be 30 per cent. within four years, 20 per cent.; and within five years, 10 per cent. My hon. Friend said that that applies only to property consisting of land or business, and that he wants it to apply to all property, but only in the case where two people lose their lives together. But why should it be fair to do that in the case where both lose their lives at the same time in an accident and not in the case where one dies one day or two days after the other? I cannot see any justification for making this great extension to the principle of quick succession to the particular case where the deaths are simultaneous. I need not go into the arguments with regard to making the quick succession Clause apply to all kinds of property, for that is not my hon. Friend's proposal, and I cannot accept it for the reasons I have given.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(In certain cases tax under Schedule A not to be levied on occupier.)

(1) Rule 8 of the Rules No. VII of Schedule A shall have effect as though the proviso thereto were omitted.

(2) Paragraph (3) of Rule 9 of the Rules No. VII of Schedule A shall have effect as though all the words after the word "recoverable" were omitted.—[Mr. Thorne.]

Brought up, and read the First time.

9.7 p.m.

Mr. THORNE: I beg to move, "That the Clause be read a Second time."
Rule VII, which is referred to in the proposed Clause, says:
Save as this Act provides in any particular case, tax under this Schedule shall be charged on and paid by the occupier for the time being.
There is another rule which gives the Inland Revenue Commissioners the right to make an agreement with the property owners who desire to pay Property Tax under Schedule A direct. There is a proviso which makes it imperative that if the landlord refuses to pay the Property Tax under Schedule A the occupier is called upon to pay the amount in question. This matter affects every tenement occupier in the country. I was under the impression until a short time ago that the landlord is responsible for the Property Tax under Schedule A, and that, if he refuses to pay
the tax, the Inland Revenue Commissioners were entitled to take out a summons against the landlord and make him pay. To my surprise, I now find that if the landlord refuses to pay the tax the Inland Revenue can call upon the occupiers of the tenements to pay the tax. I know that it all depends on the amount in question. It may mean that in some cases the Property Tax will amount to only £2 or £3, but, although that amount seems small, the occupiers of some of these houses, such as dockers and many of the people whom I represent, could not find the money. There are other rules which give the right to the tenant to pay the Property Tax week by week in accordance with the amount of the rent and to continue paying until the tax has been fully met; and he can then refuse to pay the landlord the rent to which he is entitled until he has wiped out the amount that he has been paying to the Inland Revenue. I consider that the property owner should be compelled to pay and not fall back upon the occupier.
This question was brought to my notice three weeks ago when I was holding a melting in my division. A man told me that because his landlord refused to pay the Property Tax the Inland Revenue Commissioners had put the bailiffs in his house after they had served the landlord with the usual notices. This is a serious question for the occupiers, and I hope that the Chancellor will give the matter serious consideration. It will not cost the State a farthing. I am after the bad landlords and the owners of slum property, because all the good landlords pay their Property Tax without any trouble. There are a number of slum landlords and people who buy all kinds of slum property—there are one or two in the borough of West Ham—from whom it is difficult to get the Property Tax. The same thing applies to rates, and it is a great hardship on the occupiers. Imagine the case of a woman who is the occupier of a four or six-roomed house who, because the landlord refuses to pay his Property Tax, finds the bailiffs put in. This practice affects thousands of tenement occupiers, and I hope that the Financial Secretary will take the responsibility on his own shoulders to accept the proposed Clause so that landlords will not be able to play about with their tenants, as they have been doing up to the present time.

9.14 p.m.

Mr. COOPER: The hon. Member has stated the law quite correctly. At first it does seem rather strange that the State should have the right to exact from the tenant Income Tax due from the landlord. I am sure, however, that the hon. Member, when he reflects, will be satisfied that in fact, if not in theory, no injustice is done. The fact that he, with his long experience of his constituents, should have had this matter brought to his notice only within the last few months shows that this is not a very wide or popular grievance. I think that if he inquires further he will find that there is no real grievance at all. I doubt whether he will succeed in finding a single instance where the State has exercised this power of levying distraint upon an occupier and taking furniture or inflicting any hardship whatever. After all, the landlord should pay, and the State should make him pay. That is a perfectly sound principle. But how is the State going to make a man pay when he refuses?

Mr. THORNE: Pinch his property.

Mr. COOPER: That is exactly what the State is empowered to do, but his property is in the occupation of other people who are paying him a rent for it, and yet the hon. Member says that is just what he does not want the State to do. What the State can do under the existing law is to go to the tenants of the property and say to them, "You owe so much rent to your landlord. You need not pay that rent to the landlord. You will pay that rent to the State instead." It is said that circumstances might arise in which some poor widow suddenly finds that the State has put the bailiffs into occupation. In that case the poor widow would be in the hands of the State instead of being in the hands of a very bad landlord, as he must be if he does not pay his debts; and I am sure that my hon. Friend, who is a good Socialist, knows that the State looks after people far better than landlords do. He would prefer them to be at the mercy of the State rather than of the landlord, and that, as a matter of fact, is how the case does work out. The authorities go to the tenants and explain the situation, and the tenants pay to the State the rent they would otherwise have paid to the landlord. They cannot possibly be any worse off. If they are
unable to pay their rent a situation might arise which would equally have arisen had the landlord remained. The only difference would be that the landlord would have put in the bailiffs and not the State.
I can assure the hon. Member—and his own experience bears out my words—that no hardship is inflicted under this provision of the law, and that the State, when it does have to exercise these particular rights, and the occasions are very rare, exercises them with the greatest forbearance and sympathy with the people concerned. Therefore, I really do not think that there is any need to change the law, because as it works it works to the benefit of all. The tenant is no worse off and the State gets the money due. Therefore, I hope the hon. Member will not press his new Clause.

Mr. THORNE: I knew when I started that I had a very big job in hand. In consequence of the statement made by the Financial Secretary, I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave, withdrawn.

First and Second Schedules agreed to.

Bill reported; as amended, to be considered upon Thursday, and to be printed. [Bill 85.]

Orders of the Day — LONDON PASSENGER TRANSPORT (AGREEMENT) [MONEY].

Resolution reported,
That, with a view to enabling effect to be given to an agreement made on the twentieth day of June, nineteen hundred and thirty-five, between the Treasury, the London Passenger Transport Board, the Great Western Railway Company, and the London and North Eastern Railway Company, a copy of the terms whereof was laid before this House on the eighteenth day of June, nineteen hundred and thirty-five, it is expedient—
(a) to authorise the Treasury to guarantee the payment of the principal and interest of securities to be issued by the company to be formed in pursuance of clause 3 of the said agreement:
Provided that the amount of the principal of the securities to be so guaranteed shall not in the aggregate exceed an amount sufficient to raise forty million pounds;

(b) to authorise the issue out of the Consolidated Fund of any sums required for fulfilling the said guarantee and the payment into the Exchequer of any moneys received by way of repayment of any sums so issued;
(c) to exempt the said agreement, and other agreements mentioned in sub-paragraph (b) of clause 2 of the said agreement, from stamp duty;
(d) to make certain provisions ancillary to the matters aforesaid."

Bill ordered to be brought in upon the said Resolution by the Chancellor of the Exchequer, Mr. Hore-Belisha, and Mr. Duff Cooper.

Orders of the Day — LONDON PASSENGER TRANSPORT (AGREEMENT) BILL,

"to authorise the Treasury to guarantee securities issued in accordance with a certain agreement made on the twentieth day of June, nineteen hundred and thirty-five, and to exempt the said agreement and certain other agreements from stamp duty," presented accordingly, and read the First time; to be read a Second time To-morrow, and to be printed. [Bill 84.]

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Captain Margesson.]

Adjourned accordingly at Twenty-five Minutes after Nine o'Clock.